I've been a shareholder of Kin for a few years and have watched my investment value reduce considerably. I originally entered as I saw value in consolidation and exploration potential. I still see these and that's why I continue to hold, although the hurdle to makign a return on my investment is growing larger as time passes.
On their recent DCN move, I think management would do themselves a favour if they were explain the rationale for their investment in DCN. As it stands, they have passed it off as a fuzzy 'sensible strategic move' without properly explaining the rationale. The investing public are left to connect the dots (as we have started to do above) and I have to say none of the dot connecting makes sense. As a shareholder with granted trust in management, it is disappointing as it looks like they had a rush of excrement to the brain and wanted to be seen as playing an active part in the consolidation maneouvres. In reality, with a 1.6% shareholding in a corporate entity that is already under the control of Genesis and will eventually be subject to cumpulsory acquisition, they are just passengers. They would have had the same net effect if they had bought Genesis shares on market.
On the motives, if they thought it to be a good investment - they has not played out as upon cumpulsoy acquisition of DCN shares, they will (as of today) be entitied to shares in Genesis worth 20% less than what they paid for the DCN shares. Markets move, sure. But it is management's job to allocate our capital to exploration and not playing the market. The value of DCN shares has bene fairly flat, so their best move, if they were acting as investors, would be to sell (on market) the DCN stock they bought and take a small loss. Optics would be awful, so they won't do that.
If their motive was to band together with other DCN shareholders to form a blocking stake for the Genesis bid, then that could be a valid move. But they have fallen down in the execution if this were the case. Why telegraph your shareholding to Genesis if you don't need to (as they are <5%)? Better to wait until the blocking stake is assembled and then pick up the phone quietly and construct a corporate transaction involving Kin.
One other suggested motive I saw was getting priority access to milling capacity through a small corporate shareholding won't happen. Just doesn't work like that.
Happy to be proven wrong and see an awesome corporate move come out of this.....
KIN Price at posting:
6.7¢ Sentiment: Hold Disclosure: Held
