Forum Archive Index - October 2000

["Peter Riches" <peter@peaktechnology.co.nz>]

Rob

 

I'm interested to hear how you got on with AIRVB. It seems that you could not only sell your 10,000 AIRRE rights today for a profit of about $9000, but also make a small profit on the head shares as well! Have I missed something here?

 

Peter

----- Original Message -----

From: Rob Neal and Mandy Aldridge-Neal

To: sharechat@sharechat.co.nz

Sent: Wednesday, October 04, 2000 2:02 PM

Subject: [sharechat] To good to be true?

What is to stop somebody buying a large block of AIRVB shares at say $2.80 on Friday and selling on Monday. You would pick up the rights issue of 1 for 3 at $1.50 per share. OK the price should drop on monday when it goes ex but not by a huge amount as there is a dividend going ex the following week which will hold up the share price to a certain extent.

 

Do the maths:

 

30000 AIRVB gives you the right to buy 10000 more shares at $1.50 and you can then turn around and sell them for $2.80 thats a $13,000 profit (less brokerage). The share price would have to drop to about $2.45 before you lost money. A drop of 12.5% from Friday to Monday (lets be realistic isn't going to happen)

 

I'm not normally an advocate of buying on credit but surely when a good deal comes along you need at act. If the numbers add up then why not take advantage of the opportunity.

 

Any comments?

 

Cheers

 

Rob

Disc - Do not own any AIRVB yet!