Jardine C&C: The price for being impatient

The trading of Jardine C&C rights issue had just ended following the annoucement to offer one right for every nine shares (1-to-9) owned in mid-June 2015. The conversion was at $26, at hefty discount of about 25% from its last trading price of $35 when the annoucement was made.


The two-weeks rights trading in the first half of July was right in the middle of an uncertainty of whether Greece will be out of the eurozone following the people’s mandate not to accept further austerity measures. Furthermore, the local stock market was also affected by the extreme volatility of the chinese stock markets in both Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange. On the SSE, it had tanked about 30% within 3 weeks of trading from more than 5000 to less than 3500. Certainly, such uncertainties would cause a high-beta stock like Jardine C&C to slide at a great speed, especially when the Jardine group was listed in HKSE, which had also been sliding. Within the first 8 days of trading, the share price dropped from more than $32 to less than $29 per share.  Needless to say, the rights trading tanked even more percentage-wise, dropping from about $5.40 on 2nd July to less than $3.50 on 8 July, easily about 35% in percentage term.

Having been issued with odd-lots as I have some holding of the Jardine C&C mother shares, I have no choice but to buy in more rights so that I can have full trading lots when I exercise the rights. Impatience had been the main culprit as I was too eager to procure the rights, making my average buying price for the rights at $5.06. That would mean that if I were to exercise the rights, my purchase price for the shares would be $31.06. Little did I know that the mother shares tanked significantly to even below $29 in the days that followed. With the rights tanking and in the out-of-money situation, I decided to go for mother shares buying at a few tranches at $30, $29.88 and $29.15. Luckily, the share price has stabilised and is trading at above $31 per share. Theoretically, I would have gained if I were to sell those shares, but still it is a high price to pay for impatience.

(Brennen Pak has been a stock investor for more than 26 years. He is the Principal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”) – The ebook version may be purchased via www.investingnote.com.

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