Posted without comment.
Printable View
Everything hinges on the SP falling on the news of the raise... This is your entire thesis.
Well what if the raise was due to a great opportunity to put capital to work at 20% CAGR or some other positive reason and the SP was up on the news.
Strongly agree.
If you ignore the Macro then the fruit will be far harder to pick for me and ValueNZ, Baa-Baa, Mav etc etc.
Equity premium will shrink.
DO
NOT
IGNORE
THE
MACRO
and dont stop trading global markets off the phone, shorting gold to hedge the long or any of that.
I love it.
Just in case anyone thinks Snoopy was serious about a capital raising - he cleverly did that to provide some inertia to his argument. He meant for us to know that it was a joke in order to make his following calculations 'real world'
No chance he would be stupid enough to admit to inside knowledge on a public forum.
Bow wow wow yippie yo yippie yay
Is it just all the listed retirement companies, or do the share prices of these retirement companies match the share price trends of other property companies so closely that one line is obscured by the others?
Given the difference in how the assets are funded does this prove Mr Market isn't quite as onto it as you're led to believe?
The injection of the new cash is neutral for legacy shareholders and 'johnny come lately' shareholders, because old shareholders and new shareholders subscribe for new shares on exactly the same terms and cash demands. It is the price of the old cash which leads to the entitlement to submit new cash that makes the difference.
SNOOPY
Have you ever heard of a company announcing a cash issue and the share price rising as a result? I can't think of one. But the share price falling on news of a capital raise is not the whole thesis. There is a second necessary ingredient. That being that the share is trading at a discount to NTA. If new shares are trading at a premium to NTA then the net cash benefit flows the other way, from the 'johnny come lately' shareholders to the 'legacy shareholders'.
Different situation. I made it clear that I was talking about the case of cash being raised to pay down debt while retaining the same asset base.
SNOOPY