Two Harbors Investment Corp (TWO), HCP, Inc. (HCP): These Three Companies Are Diluting Shareholder Value

Most share prices move based on per-share earnings figures and per-share asset values. HCP, Inc. (NYSE:HCP)is no different. While the company grew net income 111% and shareholder equity 38% over the 2010-2012 period, the rising number of shares in issue meant that shareholders did not see the same kind of return from their investment. The stock only appreciated by 48% over the period – a respectable amount, but less than half the rise in net income.


Overall, a company that constantly issues new stock can be toxic, especially for value investors who invest based on net asset values, only to watch as said values quickly erode.

That said, issuing stock can be highly beneficial for company growth. It’s just that whether or not this actually gets passed onto shareholders is another matter.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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