Q: Hi again 5i,
Re the question I just sent in asking for information about yesterday's sharp price decline and trading halt for DHT.UN, I've now learned of the bought-deal arrangement that was announced yesterday and which led me to sustain a significant paper loss on my first day of ownership.
So now my question is - could you please provide your analysis of the long-term implications of the bought deal for DHT.UN.
Thanks 5i.
Peter
Re the question I just sent in asking for information about yesterday's sharp price decline and trading halt for DHT.UN, I've now learned of the bought-deal arrangement that was announced yesterday and which led me to sustain a significant paper loss on my first day of ownership.
So now my question is - could you please provide your analysis of the long-term implications of the bought deal for DHT.UN.
Thanks 5i.
Peter
5i Research Answer:
DHT.UN also raised money in July, at slightly lower prices. It is growing, and has a significantly backlog of potential deals, and thus needs capital. This is the whole reason for the stock market to exists. Buying yesterday of course was not great timing, but it is very common for a stock to decline on a large issue. But the company is doing well, and we would not take the decline as a sign of anything negative. Investors simply adjust their positions. Some will sell and then buy the new issue. Some don't like dilution. But the stock is up nicely this year, and the deal will go towards new growth opportunities. Depending on how it spends the cash, we would expect a positive long term outcome here.