While a buy and hold strategy is not appropriate to all stocks at all times, when a retailer like MYR has a big rights issue to restore the necessary current asset position (and not for M&A) and trades below the rights price, my ears prick up. I have bought at a P/E of 7.7, now with a dividend to fund the interest cost on my borrowings plus cash in my pocket. The franking credits are pure cream. After the price rise, my margin lender regards this as security for more than I spent.
The cash issue gives MYR plenty of growth options, but if management only achieve market-perform, I won't care.
We have all these madly clever traders running around peeling a dollar off here and there - incurring transaction costs, current tax and stress.
Sometimes, buying stodge and putting it in the bottom drawer is a winner strategy. I will never lose a moments sleep over this transaction.
DYOR
MYR Price at posting:
$1.23 Sentiment: Buy Disclosure: Held
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