What happens with capital raisings is that a broker is appointed to "discretely" call the big institutional holders to gauge their level of interest in participating in a raising and if so, at what price. Guess what happens next? The instos start selling. Some sell to lock in profits because they know a raising is likely to lower the share price. Others sell because they know they will be able to buy back the shares cheaper in the raising. Others sell because the lower the share price goes, the cheaper the price they can demand for the capital raising.
It's a form of insider trading that ASIC seems helpless or disinterested in addressing. The big guys laugh all the way to the bank and the little guys get the pineapple.
One solution would be to force companies to enter trading halts before they are allowed to approach shareholders about capital raisings. The corporates don't want that because not all raisings attract sufficient interest to proceed and some companies would be left with egg on their faces.
ARU Price at posting:
$1.42 Sentiment: Hold Disclosure: Held
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