Q: hi 5i
Share price has ticked up and seems to have settled at the lower end of the auction price......As the closing date nears and auction closes how would you expect SP to respond.... in general, would a higher auction price be viewed as positive and how do you think shareholder should view the results...
I am a little surprised the shares have not continued upwards a little more positively....
Would the shares price be expected to stabilize at the auction price or just continue their previous trajectory downward after auction close...
thx
Share price has ticked up and seems to have settled at the lower end of the auction price......As the closing date nears and auction closes how would you expect SP to respond.... in general, would a higher auction price be viewed as positive and how do you think shareholder should view the results...
I am a little surprised the shares have not continued upwards a little more positively....
Would the shares price be expected to stabilize at the auction price or just continue their previous trajectory downward after auction close...
thx
5i Research Answer:
Typically, shares sell off a bit after a Dutch Auction, as investors who tendered typically do not get a full allocation and often sell to clean up their portfolios (they have already shown willingness to sell so some will still sell their leftover shares). For remaining shareholders, of course, who do not tender, a lower clearing price is better. It's a tough call, but we would still expect fundamentals and sentiment to drive the share price more than the auction results. After all, it is for less than 10% of the shares outstanding. We would expect a small dip after closing, and then perhaps a continued drift lower until AC's prospects improve.