The RHG situation is very complex & unresearched comments can be...

The RHG situation is very complex & unresearched comments can be very inaccurate. Certainly RHG presents a very speculative situation.
1. Westpac offer underpins RHG for approximately 2 months till voted on, so given only a week has passed & RHG was considerably higher a week ago new bidders will view the situation in the light of the current price.
2. If only Westpac bid then RHG with Westpac support will probably be able to refinance & run out loan book & earn what is available in the spread.
3. It is not in any governments interest to see this lender default & we have already seem how overseas governments /federal banks have supported problem borrowers i.e. lower interest rates.
4. Stability is slowly returning to this sector & refinancing is happening as confidence returns.
5. RHG has moved to protect margins with increases its interest rates & also has some protection in break fees up to 2%. So not all borrowers are going to leave RHG but if some leave it not only lowers the refinance figure but could also be very profitable if break fees are triggered.
6. Three key factors are 1. interest margin made on portfolio 2. cost of managing portfolio 3. rate at which run off occurs if only Westpac offer
7. RHG at current prices would have to be being reviewed by some lenders who could be prepared to take over the full book as compared to Westpac cherry picking approach.
8. Remember if an alternative offer before meeting, Westpac proposal will not get the numbers to be passed.
9. Current liquidity presents easy opportunity to acquire 5-10% & vote no to Westpac while launching an alternative takeover.
This situation is certainly highly speculative but not resolved yet.
I will leave each one to do their own thinking but I know what I am doing given I have already had a big trading win on their first tank out to low 60's before going over $1.
The lower the share price drifts the more research one should apply to this situation because the total of the whole is considerably lower.
Regards
Buffett