The idea is every 1 fxj share contains 0.1 of one tenth of Domain.
If fxj at 0.95 , you will have each share delivering 0.3 to 0.4 value in domain.
If you argue with me that the current price has already price into the domain
Price, let's look at the down side here.
If fxj drop to 0.85 after the split, I will pay on average one dollar per domain share. Or worse, a 0.2 loss per share, I will still be paying 2 dollars for one domain share.
Assuming domain really only worth 3 dollars a share, I will not make any losses until the fxj price is lower than 0.65.
There's a lot of intriguing things here, like the passive funds that will be force to sell the domain shares because it's not officially in the ASX. But then, it would be introduced back to the passive fund again once it gets to point, not to mention the growth fund and real estate themed etf.
Remember there's only 40% of the shares floating around. The shares will be more than likely to be bid up.
Well I just gave you my whole thesis.
FXJ Price at posting:
95.3¢ Sentiment: Buy Disclosure: Held
