Much to my surprise, when I calculate SharesQ/SharesFDQ I get a figure greater than 1.0 for many companies. This seems to be the case for smaller companies, whereas large mature companies have a ratio of less than 1.0. Why would the ratio ever be greater than 1? Is there some (time) difference in when these figures are calculated? Do I need to look at TTM instead of latest Q? What am I missing here?
Steve
I’m going to go out on a weak limb and speculate here.
I suspect that the most recent quarter’s fully diluted shares listed for some companies are for a previous quarter or one of the other fillers listed in the factor reference for SharesFD, when the current quarter’s number is unknown. Smaller companies don’t get detailed info reported to Portfolio123 as quickly as large companies, so partial data might be expanded by filling in for missing items. Also, from the factor reference write-up: “While CompuStat does not try to estimate fully diluted shares itself, it does note that it will specifically not report it when the company states that the effect of derivative instruments would be anti-dilutive.” You could do a few spot checks of current and previous quarter fully diluted share counts listed by P123 versus 10q reports to confirm this, or perhaps check the CompleteStmt or StaleStmt flags.
I can see small companies being much more likely to have ownership contracts that protect the voting rights of a small cadre of principal owners, such that their options are anti-dilutive and would trigger the above scenario.
Now I’m wondering if the listed fully diluted count is actually accurate and the anti-dilutive warning by CompuStat is not being followed! Hmmm…