pre open, page-38

re: look out below!!! As found in "The West Australian" this morning,


Daytraders learn cents of proportion

By Griffin Longley

IN the furnace of financial markets, it is understandable how an enthusiastic daytrader or stockbroker could forget to check whether a takeover bid is being quoted in cents or dollars.

The oversight is even more forgivable when it is remembered that market protocol dictates that share bids are usually stated in dollars.

But such sentiments will be cold comfort to the dozens of daytraders and the handful of broking firms who thought they were set to make a motza when Perth-based Cobra Resources announced to the market on Tuesday that a Terry Stephens would make a bid at 0.025¢ a share.

Assuming this was written as a dollar figure, and therefore 2.5¢, and with Cobra shares trading at just 0.6¢ at the time, traders ignited a buying frenzy, pushing the stock to 1.6¢.

But the confusion did not end there.

Late in the afternoon Cobra announced to the market that the actual offer price was 0.25¢, "that is one quarter of a cent".

The second "clarification" sent the stock plummeting back to 0.6¢, leaving daytraders badly burnt and many questions unanswered.

A trading halt was finally called yesterday morning.

What is known is the stock more than doubled in value in the four hours between when Cobra foreshadowed the 0.025¢-a-share bid and gave the market a so-called clarification.

A Cobra spokesman said yesterday that the initial announcement was made after consultation with the exchange and that the company still did not believe it had enough information about the bid.

He said it was awaiting information that would normally accompany a notice of an intended takeover bid.

He said Mr Stephens had given the 0.025¢ figure in an email alerting the company to his intentions, but Cobra questioned him later in the day after it became clear the market had misinterpreted the offer.

A stock exchange spokesman said it had not seen any cause for alarm in Cobra's shares trading up to three times their opening price on Tuesday.

He said there was no suggestion at this stage anyone intended to mislead the market.

An ASIC spokeswoman said it was making inquiries into the confusion surrounding Mr Stephens' offer. WA Police said yesterday they were also making their own inquiries into Mr Stephens and were preparing extradition paperwork to bring him back to WA.

Mr Stephens, who skipped bail in WA in May 2001 on three attempted fraud charges, is believed to be living in NSW after having a turbulent stint in South Australia.

But the police spokesman admitted police did not know where he lived and officers had unsuccessfully sought assistance from a newspaper that had tracked him down.

It is believed he visited Perth at least four times in late 2001 or early 2002 in a previous, foiled takeover tilt at Cobra and spoke openly to Cobra shareholders of previous convictions for fraud.

Cobra said it would release a statement today clarifying its response to his latest bid.