[genericresponse]

What I was saying with the "destroyed" was something like a reverse stock split. (Your proportional ownership stays the same, but your number of shares reduce.) The idea I was communicating that the number of shares itself is not a meaningful judge of anything unless you understand what those shares represent.

If covenants are not in place, you could also "destroy" the proportional ownership of shares by diluting down to a negligible value.

I guess what I'm saying is that people should always be sure they can trust management, ask for a cap table and probably consult a lawyer.

[abalone]

Stock reverse splits don't "destroy" value anymore than exchanging four quarters for a $1 bill. You do not have less value just because you own 1 unit instead of 4, because the value of the unit increased proportionately.

You can dilute proportional ownership, but there you just shifted the meaning of the term "destroy" and are using it in a funny way. Dilution does not decrease value. The reason your percentage of the pie decreases due to dilution is because the pie is getting bigger. You still have the same absolute amount of pie on your plate. Nobody destroyed any pie.

[genericresponse]

So I think you're mixing up my two points. A reverse split destroys the stock object, reducing the total number of shares but the proportional value remains the same. We both agree on this (per my previous comment).

Destroy can be used in both ways because language is context sensitive and the definition is somewhat broad. You can destroy value through dilution by getting less than you give. Example: If my company is fairly worth $100 and I own two shares and you own one, you own $33 worth of value. I can then issue my friend bob another share because he gave me a great lunch recommendation and I thought it was a big morale boost, something I can do because you don't have a covenant in place. My company is still worth $100, you now own one of 4 shares and only $25 worth of value. I have now destroyed $8 worth of your value. It's an ownership shift relative to the company, but a value destruction relative to you.