Hostile takeover share price behaviour?
Discussion
I have some shares in a company which I bought just before the 2008 crash, in retrospect they were a bad investment as there are no dividends, but at the time I didn't know any better other than to try and do something with some spare savings. Fast forward to today, and the share price has slowly risen over the years, until the last week when another company has increased their stake in the company to 10% (with talk of them increasing more), and the share price has risen by 40% . So now the shares are just about at a price where I'd be happy to sell them and break even on my original investment.
Given the sharp rise in price in a short period of time due to the new circumstances; is there a general trend in share price behaviour when one person tries to increase their stake in a company, whilst another tries to defend their control? Or is there no president on the subject and it's purely on a case by case basis? Obviously I'm wondering if it's worth me holding on a bit longer to maximise my return.
Given the sharp rise in price in a short period of time due to the new circumstances; is there a general trend in share price behaviour when one person tries to increase their stake in a company, whilst another tries to defend their control? Or is there no president on the subject and it's purely on a case by case basis? Obviously I'm wondering if it's worth me holding on a bit longer to maximise my return.
Ubisoft/Gameloft?
Just my personal opinion but I think Bollore is a compete idiot. A rich one but an idiot nonetheless.
See - how to sell SFR at a massive discount, how to sell Numericable below market, how to invest in the biggest value destroyer of all time: Telecom Italia, how to give ATVI away for a song at exactly the wrong moment in the gaming cycle.
He makes money DESPITE of his best efforts not because of them.
Also there is nothing wrong with having no dividend - depends what kind of investment you are looking for.
Special situations like this are very hard and some funds are dedicated to investing in just these types of investment because it can be so complicated.
Usually the stock will trade below the price of any potential take-out offer owing to the very real possibility that no offer eventually arrives or the parties walk away from each other.
So for you as an investor to make an intelligent decision you need to know whereabouts the take-out offer might come (hard) and more importantly how likely that offer is to actually be made and come to fruition (even harder/impossible).
My general rule of thumb is that if you are happy with the current price then you should walk away because the chance of you having better insight than the market in these circumstances are less than zero.
Or at the very least take some profits and reduce your exposure since the risk reward is now completely different to the original reason and original valuation at which you chose to invest.
Just my 2p DYOR etc...
If you tell us the stock I might have more ideas.
Just my personal opinion but I think Bollore is a compete idiot. A rich one but an idiot nonetheless.
See - how to sell SFR at a massive discount, how to sell Numericable below market, how to invest in the biggest value destroyer of all time: Telecom Italia, how to give ATVI away for a song at exactly the wrong moment in the gaming cycle.
He makes money DESPITE of his best efforts not because of them.
Also there is nothing wrong with having no dividend - depends what kind of investment you are looking for.
Special situations like this are very hard and some funds are dedicated to investing in just these types of investment because it can be so complicated.
Usually the stock will trade below the price of any potential take-out offer owing to the very real possibility that no offer eventually arrives or the parties walk away from each other.
So for you as an investor to make an intelligent decision you need to know whereabouts the take-out offer might come (hard) and more importantly how likely that offer is to actually be made and come to fruition (even harder/impossible).
My general rule of thumb is that if you are happy with the current price then you should walk away because the chance of you having better insight than the market in these circumstances are less than zero.
Or at the very least take some profits and reduce your exposure since the risk reward is now completely different to the original reason and original valuation at which you chose to invest.
Just my 2p DYOR etc...
If you tell us the stock I might have more ideas.
walm said:
Ubisoft/Gameloft?
If you tell us the stock I might have more ideas.
Got it in one! If you tell us the stock I might have more ideas.
Thanks for your input, yes I'd love to hear more of your thoughts on the matter. It’s certainly nice to see that the share price has finally recovered to a price where I can make this decision after they plummeted to lower single figures all those years ago. It just seems like now is the appropriate time to decide whether to cash in or not. Like I said; I’d be more than happy to break even & wouldn't be bitter at all if the share price rose to price where I’d make a profit and I missed out, but at the same time a bit of profit is always nice :-)
UBI is family owned (although only 10%) and the CEO (family) was in Les Echos today saying he doesn't want to sell to Viviendi but remain independent.
Bollore stated that he might want to buy both and put them together (UBI+GFT) - which incidentally makes no sense whatsoever - there are no syngergies between making 5 blockbuster console games a year and pushing out loads of mobile games.
So there could be a bidding war.
But on fundamentals the current price is way over what I would pay for them on their own.
Again just my 2p but I would be taking some profit here at least.
3 months ago you had an investment worth say £1,000.
That investment is worth £1,500 now - so I would at the very least be re-sizing back down to £1,000 if you see what I mean.
Bollore stated that he might want to buy both and put them together (UBI+GFT) - which incidentally makes no sense whatsoever - there are no syngergies between making 5 blockbuster console games a year and pushing out loads of mobile games.
So there could be a bidding war.
But on fundamentals the current price is way over what I would pay for them on their own.
Again just my 2p but I would be taking some profit here at least.
3 months ago you had an investment worth say £1,000.
That investment is worth £1,500 now - so I would at the very least be re-sizing back down to £1,000 if you see what I mean.
Yeah I see what you mean. I was looking at it from the perspective of selling all the shares, I hadn't considered only selling some of them, so thanks for putting that train of thought into my mind. Unfortunately the shares were bought at 27 EUR, so can’t turn a profit on any of them just yet as it stands.
Gogoplata said:
Yeah I see what you mean. I was looking at it from the perspective of selling all the shares, I hadn't considered only selling some of them, so thanks for putting that train of thought into my mind. Unfortunately the shares were bought at 27 EUR, so can’t turn a profit on any of them just yet as it stands.
With all due respect that's absolutely NOT the right way to think about this or any equity investment.What you bought them for is completely irrelevant.
That's not what I meant by "taking profits".
The shares are up 50% in three months. That is what matters here - that and what fair value might be for them or in a bid scenario.
That's the profit you made.
Just because something was worth EUR27 nearly 10 years ago has almost no bearing on their value today.
For example, people thought Volkswagen was worth over EUR200 earlier this year but that was before they were shown to be fraudulent liars.
BP was worth over 600p until they created an environmental disaster and the oil price dropped from over $100 to under $50!
What matters is what is happening NOW!
walm said:
With all due respect that's absolutely NOT the right way to think about this or any equity investment.
What you bought them for is completely irrelevant.
That's not what I meant by "taking profits".
The shares are up 50% in three months. That is what matters here - that and what fair value might be for them or in a bid scenario.
That's the profit you made.
Just because something was worth EUR27 nearly 10 years ago has almost no bearing on their value today.
For example, people thought Volkswagen was worth over EUR200 earlier this year but that was before they were shown to be fraudulent liars.
BP was worth over 600p until they created an environmental disaster and the oil price dropped from over $100 to under $50!
What matters is what is happening NOW!
Ah right, NOW I know what you mean, thank you for spelling that out for me (That’s genuine, not sarcasm). As you can probably tell I'm inexperienced in such matters hence asking for advice. This is exactly the kind of guidance that I was looking for thank you :-) What you bought them for is completely irrelevant.
That's not what I meant by "taking profits".
The shares are up 50% in three months. That is what matters here - that and what fair value might be for them or in a bid scenario.
That's the profit you made.
Just because something was worth EUR27 nearly 10 years ago has almost no bearing on their value today.
For example, people thought Volkswagen was worth over EUR200 earlier this year but that was before they were shown to be fraudulent liars.
BP was worth over 600p until they created an environmental disaster and the oil price dropped from over $100 to under $50!
What matters is what is happening NOW!
This is probably a stupid question, but as you know this is new territory for me. If I sell my shares over the weekend, will I get them at the last Closing Price, or will they be sold at the Opening Price on Monday morning when I imagine the order will be actually processed? From what I understand the share price can still change outside of day trading hours.
If it's a company listed on the stock exchange the share price will be whatever those shares can be sold for at the instant they are actually sold in the market; not the previous closing price and not the price when you gave the "sell" instruction. (Unless the sale is done live while you are on the phone in which case you would be making a sell/no sell decision based on the specific price offered to you.)
Ozzie Osmond said:
If it's a company listed on the stock exchange the share price will be whatever those shares can be sold for at the instant they are actually sold in the market; not the previous closing price and not the price when you gave the "sell" instruction. (Unless the sale is done live while you are on the phone in which case you would be making a sell/no sell decision based on the specific price offered to you.)
OK, so after trading hours, there's no actual way to know the share value, as it's only worth whatever price the last sell/buy was at? You'd basically be selling blind?Gogoplata said:
OK, so after trading hours, there's no actual way to know the share value, as it's only worth whatever price the last sell/buy was at? You'd basically be selling blind?
You can put a limit price on it (i.e. the least price you'll accept) but if the market price falls below this they'll remain unsold.
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