Forum Archive Index - December 2000

[Mike Hudson <MHudson@placemakers.co.nz>]

Grant wrote

"Very possibly the reason for today's quick move upwards in FFS / FFSPA is
due to the Business Herald story entitled "Takeover risk for Forests".
Basically it is saying that CSFB potentially controls the destiny of
Fletcher Forests after the shortfall in the rights issue, and therefore
could hold a strategic stake which would be of much interest to other
parties who might want to gain control of Fletcher Forests. 
Apparently CSFB was a large buyer of Forests shares yesterday, so it looks
like they are trying to build a large stake quickly for whatever reason. 
Anyway, it's good news for shareholders whoever is doing the buying :-) "
 
It puzzles me. It was apparent to everyone that CSFP were going to control
the destiny of FFS; in fact if the doomsayers were listened to they would
have controlled more. According to the efficient market theory this
information would have been built into the price.  I can't for the life of
me think why investors would pay 20% more today than they would have last
week - nothing's changed except that the take up of the rights was a few
percent higher than the cognoscenti were expecting.

The only answer would be as Grant suggests, that CSFB or someone else is
building up a stake. It will be interesting to see if any SSH notices are
posted within the next few days. This might explain the huge trading in what
where otherwise worthless rights. On the other hand it seemed fairly
apparent that somebody and CSFB would be the party with the best motive was
propping up the share price in the last couple of weeks. If CSFB were keen
to build up a bigger stake it would have been in their interests to let the
price fall below 25 cents so they could pick up a bigger slice as
underwriters

Who knows? Perhaps another example of the irrationality of the markets.
After weeks of indecision I sent my cheque off in the last post on Thursday
but expected the price to languish until either some action on the CNIFP or
the release of the half yearly results. My average entry price of 35 cents
doesn't look too bad now!  Famous last words?

Cheers 
Mike H 

   


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