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Saturday, 21 February 2015

Pesona and Pesona WC - A Mismatch of Pricing

You may read it at humblepie188.blogspot.com

Pesona - RM 0.865
Pesona-WC - RM 0.54
Exercise Price - RM 0.25

I found this Free Warrant proposal seems a bit weird. The cum right price is RM 0.86. On Feb 4th, listing on warrants. Ratio 1:2 (You get 1 Warrant for every 2 shares held). But on Feb 4th, instead of the price adjusted down, it went up from RM 0.86 to RM 0.885. Basically your free money for that day:

RM 0.28 (0.56/2: half the value of warrant - ratio 1:2) + RM 0.025 = RM 0.305.

It is 35.5% gain in a day!

Do not forget this counter run from 3 years low of RM 0.07 to RM 0.865.
Fundamentally we are not comfortable.

IF YOU BUY THE WC with RM 0.54 and add RM 0.25 (exercise price), your cost would be RM 0.79 (and you will end up holding Mother Price worth RM 0.865 - a paper gain of 9.5%!)

Would that be that Big Free Lunch?
From the conversion price, it looks an ideal investment but personally I will give it a pass.



P/S: Feel a bit anxious when I see a so big KAPLA jumping on the street. Perhaps, I do not eat KAPLA that much. =)


Disclaimer and Declaration


The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares may be citied for
illustration purposes.

Regards,

Humble Pie

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