Member Info for Poleaxe

Why would any well performing tracking sell a share three weeks before it leaves the index it is supposed to be tracking especially if, as you seem to believe, the share price is about to rise?

Remember, the index is derived from the market caps of the constituents. If ITV rises, the index will rise accordingly and they'll mistrack. You buy a tracker to track. If you want it to be actively managed, you buy an actively managed fund.

The FTSE 100 doesn't get adjusted until 21st Sept. Why would FTSE 100 trackers have already sold out? Will they have bought BME? That's not exactly tracking, is it?

Supposing there's a bid for ITV before 21 Sept? Or a profit warning from BME? They're not paid to be clever. Aren't they supposed to keep it cheap and run a PC to manage their holdings, rather than pay expensive fund mangers to attempt to outsmart the index?

That's why you'll see a big uncrossing volume at close on 18th Sept. Like we saw on Friday with the MSCI index relegation.

I agree Slime1. All this talk about the FTSE 100 yet the MSCI seems to have been completely ignored. Surprise, surprise, almost 6% of the company uncrossed at close on Friday!

https://www.msci.com/index-review

In your experience Tom8080? Is that based on researching the outcome of previous FTSE reshuffles? Have you the stats?

Looking at the closing prices on 19th June 2020 when the previous review took effect we have:-

Promotions
AVST, GVC, HSV, KGF - all higher now

Demotions
CCL, CNA, EZJ, MGGT - all lower now, with the exception of CNA which is up about 4.5%

The large trade at close on Friday was the MSCI index change, nothing to do with the FTSE 100 demontion which won't take effect for another three weeks.

They are realigned at close on Friday 18th Sept. Until then ITV will be an active FTSE 100 constituent.

Often I fear acquisitions are driven by empire building directors, who see it as a career progression and have little 'skin in the game' themselves. They're egged on by corporate advisors who pocket fat fees for little risk. That's why the rights are pitched at 25p, to minimise risk for the underwriters.

Yes, a dip in the closing auction. They're now a more sensible value -about the same as they were yesterday.

SIG was a bit different. For a start, it was an open offer, not rights, so there was no value for people who didn't take it up. Then, whilst the open offer was at 30p there was also a firm placing at 25p, which is probably holding it back.

A better comparison might be the WTB rights issue conducted at 1,500p There the price initally bounced, before people came to their senses (perhaps after they'd done the sums). However, it's still trading comforably above the 1,500p rights price. I think we could see something similar here.

What many PIs don't seem to get is the total cost of taking up your rights isn't 25p. It's 25p put the value you could have got had you sold the nil paid shares (currently about 24.2p).

It's all a smoke & mirrors con trick, which too many PIs still fall for.

People should have the MTON rights in their online accounts today, so if they think the price will fall (which it may well do) they could sell their MTO and MTON now.

As I type MTO are about 49.6p to sell and MTON 24.2p. Given you have 11 MTON for every 5 MTO held at close yesterday that's a total of 102.84p for every share held yesterday. Not bad eh!

Sandyman, I wasn't meaning that MTO will trade at (or below) 25p. I was saying that MTON (the nil paid rights) will obviously track about 25p below MTO.

Taking into account the value of the nil paid MTON shares(11 for 5), buyers of MTO in recent days should be happy.

I have my doubts MTO will trade at 25p near term. 25p was a low ball price for the rights, determined by underwriters who want fat fees for low risk. For a given fund raise, it doesn't really make a difference to holders what price the rights is set at.

It would have been a lot cheaper to buy yesterday rather than today. Just add in the value of the 11/5 nil paid rights (MTON) you've missed out on. They'll track 25p below MTO.

If you didn't buy in recent days you rather missed out, short term at least. If you'd bought at, say, 82p you'd be well in today.

Look what happened to WTB to see the opportunty in the confusion.

Why the fall? All due to the pausing of the share buyback programme? Are people concerned as to the reason?

14th July is the forthcoming day to worry about. To qualify you need to be holding at close on Monday 13th. If you buy shares on or before 13th you'll qualify. If you sell them on or before 13th you won't.

You'll then have about 10 days (depends on broker) in which to decide if you want to take up the rights and cough up the money (you certainly don't need the funds on 9th).

Rights issues are a bit of a con trick IMO and not always worth taking up. The rights discount is all a blag. Any benefit you get is offset by the fall in the share price when they go ex-rights (which in this case could be 50%). Remember that, unlike open offers, rights have value and can be sold nil paid and usually have value if lapsed. Holders don't really get a special deal over anyone else in the market. A lot of PIs don't seem to get that, which is probably how companies continue to get away with them.

Up until 14th July it's bound to be volatile. It's a 3x gearing play on the shares ex-rights. In other words, a 30% move in the share price now only represents 10% (actually closer to 9%) move ex-rights.

Meant to say 358m SHARES.

According to the company, only £80m of the £190m rights issue goes towards buying Interserve, although they're paying £120m plus 358m for the company.

"The remaining net proceeds of approximately £110 million will support Mitie's liquidity for the medium term"

I'd expect a large volume to be traded tomorrow (Thursday), particularly in the closing auction (when 15m - 20m shares might get exchanged).