4. The volume today is normal for a stock that is now an ultra-low risk 21 day corporate bond, but was a more risky equity security on Friday, as different types of buyers and sellers move in and out. Equity Mgrs who have an immediate new exciting opportunity will switch and sell at a 1c discount.Others may have required the Funds for another deal and need to sell now as the Completion date was delayed by two weeks.Hedge Funds always have heaps of Cash and are always looking to park Cash for a few weeks.Using a brokerage rate of 5 bpts, buying at $2.99 gives a 5.61%pa return.The Principal trading desks of the big Investment Banks pay no brokerage and will return 6.63%pa for a risk that is as close to zero as it can be without being zero!Plus bond fund managers and equity fund managers who have Cash earmarked for early January may also have been buyers today.LM & others, I meant to Post yesterday, but ran out of time.
I have a few comments below, but firstly there have been some good comments from LM & others like the SMH article yesterday.
1. There have been other potential bidders that have looked at VRL (like PEP one year ago), and none have decided to bid at a higher price.So maybe $3.00 is a full price.
2. Mittleman is a rationale intelligent Fund Manager, otherwise he wouldn’t be running his own firm.So it didn’t surprise me at all that he accepted Scheme A.Knowing that Scheme B was going to get over the line, he would have been silly to vote Scheme A down. Fund Mgrs need every cent they can get to outperform their competitors.
3. Just because many have bought in years ago and much higher prices, doesn’t mean that the Value is at the higher prices.Maybe the Share Price was way too high years ago, mgt have destroyed Value, or external factors have dampened growth prospects.
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