Yes this will be interesting. The huge short position makes more sense if they had a whiff this was coming. I am curious though, for the shareholders that have lent out their stock, would they be entitled to participate in the rights issue? Or would they first need to call in the stock? Since the institutions entitlement is occurring today and tomorrow I assume they are entitled to participate with their stock lent out.
Not quite sure what to predict from here. The dilution at that price isn't good, but I will take up the entitlement so won't get diluted comparatively. On the flip side the post rights issue MYR will have very low debt and will therefore be very low risk and will probably provide a floor price as the post rights MYR will have been substantially de-risked. Generally a capital raising will cause the share price to drop which isn't great. On the flip side this is possibly what the shorters were angling towards so we may see a technical bounce as the shorters cover, and as a de-risked MYR gives them no more downside to work with.
Once the instos have their extra shares through the entitlement they can effectively use the shorters to make an easy profit by calling in the lent out stock, then selling their new shares at a higher price after the shorters cover. We could see some wild swings over the next week or so. Will watch this closely in case there are some small windows to sell at a great price, possibly while still participating in the rights issue.
All imo dyor.
MYR Price at posting:
$1.21 Sentiment: Buy Disclosure: Held
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