The biggest clue to events short-term have been flagged by the rights issue terms...it is non-renounceable, meaning they cannot be traded on the ASX!
This suggests several things...
1. the shares should continue to attract interest up to the record date...they may continue to rise, trade sideways or even fall, but the volumes should remain healthy. This may depend however on how many of the bigger players are already set?
By the way, you need to be "registered" on the record date, therefore the "ex" date will be 5 business days prior to this...you will need to be holding on the night prior to the "ex" date.
2. Being non-renounceble, there is no need for manipulative practices. In other words, there is no reason why certain parties might want to run the price down in order to encourage people to sell their rights...being non-renounceable, they can't be sold!
3. The rights issue is comfortably in the money, so there will be no need for the company to make any significant announcements to support it...therefore, I would expect any such announcements might be delayed until after the issue has been bedded down.
4. As the rights issue will be non-renounceble, , it will prevent anyone accumulating a large position on market...if they want the rights, they will simply have to buy the shares.
5. Non-renounceble issues are usually aimed to attract "larger" players, or more longer term investors. They also typically experience a shortfall...I wonder who will pick these up?
6. Clearly, the RRS share price will fall back after the "ex" date...I currently see a figure of about 3.5c using todays figures. Interestingly, this was the mean VWAP for the period of consolidation just prior to the most recent rally.
7. You tend to get more professional traders in the options, therefore they should give a pretty ggod clue to the expected "adjusted" share price after the "ex" date.
Ignoring a bit of silly stuff around the edges, the underlying trend should provide a valuable clue...at 1.3c, they are suggesting the shares should settle around the 3.4/3.7c level.
7. Finally, the recent on screen action (larger buyers, smaller sellers) suggests the game is deffinately on for RRS now...much higher prices (adjusted for the rights issue) would appear on the cards!
To see such activity at the top end of recent price fluctuations is a very bullish sign. You need to be mindfull however of the timing of your trade. It is not unusual for stocks to drift aimlessly, immediately after such rights issues.
Typically in such scenarios, once the music stops and things settle down somewhat, short-term or impatient traders tend to get sick of waiting and slowly but surely exit the stock...given the number of shares on issue, there is bound to be plenty who will fit this profile.
Larger players tend to think in terms of months and years, rather than days and weeks...it might be worth remembering this point?
Cheers!
RRS Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
