That's the reason for the halt in trading in EBI.AX:
"Everest Babcock & Brown Alternative Investment Trust (EBI) requested a trading halt in relation to its units earlier today following an irregularity in the theoretical ex-rights price published this morning. The price published was $3.785. EBI confirms that the theoretical ex-rights price of EBI units is $4.165 based on the close of 3 April 2007 price of $4.26 and the entitlement issue price of $4.07."
So my bet was correct. I didn't see this theoretical price. But I thought the market price was too low. A nice $A1600 in profit as a result with very little downside risk. Seems trading has restarted and the price is still at $A3.85. Hmmm.
2 comments:
I'm tempted to buy some (they closed at $3.89, so are still well below the theoretical ex-rts price) BUT I don't know why there was the huge drop from 5.4 to 4.2 in Feb so I'm not game. Shows how lazy I am - I can't even be bothered checking through the old news flashes to check if there was a split or something more fundamental to explain the market pricing.
It might be trading below the calculated pricing if there is a belief that the rts issues reveals a need for cash (eg. high debt), which could be problematic, especially if its a renouncable rts issue and doesn't get filled.
I think I'll just stick with my current long-term speculative play of buying IPEO (options to buy IPE shares at $1.00) - they're currently only around 4.5c each, because the IPE shares are stuck around $0.98. I'm hoping that by the time the options expire later this year the IPE share price will have gone up - at last report the net asset value was around $1.25 per share, as most of IPEs funds are invested in All Ords stocks while they slowly pick and choose private equity investments to invest in. With the All Ords up a fair bit since the last NAV update, they "should" be worth $1.30 or more by now, so the IPEOs could rise from 4.5c to 35c if the IPE shares trade up towards NAV in the next 6 months...
Biig drops in price earlier are due to distributions being paid. For Australian investors it's not very tax efficient. Best in a super account of some sort. The rights issue is to raise more money to invest. They also did an institutional placement which was oversubscribed. So no problems there. My next post will be on Everest Brown and Babcock specifically.
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