I was reflecting on some of my assumptions and theories with RAC. I have very little experience with investing, so wanted to share my thinking and maybe get some feedback on these points from more experienced people.
1) Timing of a potential buyout
I saw a post recently along the lines of someone not wanting to trade RAC because it would reset their CGT clock. I really doubt there will be a buyout in the next 12 months, my guess is that it is still at least 1.5 – 2 years away. This might just be wishful thinking on my part because I believe that the longer it takes, the bigger it will be.
My point is that if I was a more experienced investor I would have considered trading recently, and probably still now. Why don’t other experienced investors don’t seem to be doing this? Or are they?
I do think a partnership before a buyout is most likely, and this could be announced any day now. So, hopefully, the price might jump quickly. That could also be why I guess.
Does anyone here expect a buyout in the next 12 months? Do you agree with my assumption that the longer it takes the better for shareholders. Or could waiting too long be a problem with all the macro stuff going on? (I realise there is a very real and human side which I am ignoring here, but that's the nature of an investment forum).
2) Shareholders voting on a buyout
I assume that 51% is the magic number, as in the owners of at least 51% of shares need to realise the true value of RAC to ensure that any low-ball offers are rejected.
I have read that a hostile takeover is a possibility, and that the only way to protect against this is for the majority to simply not sell their shares until an appropriately massive offer is made. They could even be accumulating now and planning for this but I don't think anything can be done about this,
So, I'd like to know who the top shareholders are and how many of them are there? It is possible to get a list with this info?
I would also expect that the composition of this list might change as RAC becomes more mainstream and is no longer under the radar. Is it likely that institutions will come in and pick up significant amounts further down the track as it is de-risked?
How would this affect the likelihood of a low-ball offer being accepted? My simple thinking is anyone with a bigger portfolio would be happy with a lower offer.
If you are a small fish like me you might be hoping to make at least 5x or maybe 10x on an investment like RAC. In contrast, someone with millions invested would probably be chuffed to double their money. I would also guess that instos are not dreaming of a ten bagger like we are.Once again, would love to hear people’s feedback on my thoughts here.
And a final random question (which will really make me sound clueless, and I am. But this is my choice).
3) Stop losses will be pointless, right?
Let’s say things go well and the RAC share price rises over the next few months. By early next year I might be in a position where I have made good money, but still hoping for more.
I feel like in a normal situation stop losses would work and make sense. But with RAC (and presumably other biotechs) it is sort of a make or break situation. If the price suddenly drops it will be because of bad results and all potential buyers will immediately disappear. There won’t be anyone willing to buy at all, so RAC could lose most of it’s value overnight if things go badly.
Seems like the only way to protect profits is to sell along the way, but I’m pretty sure I don’t want to do that.
(20min delay)
