IBA's Affair

I sold my entire IBA holding a few weeks ago, but still very interested to watch how this share's doing. IBA was one of my first investment on the ASX, and I was actually very happy with its performance prior to the iSoft merger business. Now I am out and was actually very relieved! (although I should have done better if I exited it few months back...)

Many things happened since the talk, and of course you aware of the falling of IBA's share prices since then. These are what happened after my exit:

• Share price went down as a result of the Renounceable Rights issue to buy new IBA shares at AUD $ 1.05 per share.
• Gary Cohen, a Director, sold more than 17 million of his entitlement rights just a day before the trading halt. Another Director, Amrit Chopra (Non Executive Director), dumped his entire holding on IBA (rights and shares alike). On the 1st of June 2007, he held nil.
• iSOFT received a letter from CSC Computer Sciences Limited (CSC) advising that CSC does not intend to consent to IBA’s acquisition of iSOFT. It is a condition of the acquisition that iSOFT obtains CSC’s consent to the change of control of iSOFT. CSC's contract with iSoft contains a "change of control" clause which gives the US firm the right to ditch iSoft if the business is sold.
• ...........

I guess it will be a long time for IBA to gain a positive momentum again. Meanwhile, I will be waiting at around $0.70, possibly, to reenter the market. We'll see!

In the Red Zone

The last two days have seen most shares in my portfolio in the red zone.
Apart from my choice of shares, the all ordinary fell yesterday, and continue to fall today. This is where I see some points of diversification. Most of my holding are miners, and the fall of resources prices takes a big toll on the share price. There was also an opinion from Greenspan, fearing the correction in Chinese stock market.

On another thought, this has got to be more than just those factors, as Tassal Group and REX , who usualy quite stable was also quite volatile today. Tassal Group fell as low as $2.86 before bounced back to $3.24.

Holding breath, see and hope next week will be better.

Regional Express (REX.ASX)

First time I learnt about REX, is from The Age newspaper early this year. The article mentioned some dark horses on the ASX that they predict will do alright this year.
One of them was Regional Express. It was one of the Rivkin Reports' favourite.

It took me about five months to enter REX's market, after watching it closely for about one month. My entry price was $2.29 (I hope it's not too high).

These are some of the figures from Aspect Financial:
Value :Above avg (2)
Risk : Lowest risk (1)
Growth : Above avg (2)
Income : Below avg (4)

I think it's time for me to take up some lower risk with a stready growth investments. REX seems to be one of them.

The Rex Group (REX) provides passenger airline, freight & charter air services. It is essentially the merger of the businesses of two air carriers in Australia, namely the passenger airline businesses of Hazelton and Kendell.

Nonrenounceable Entitlement Issue

Interesting things are happening in Deep Yellow Limited (DYL.ASX)

Yesterday afternoon, DYL announced that it has resolved to undertake a 1:12 non-renounceable entitlement issue at 50c per share, to raise up to approximately A$40 million.

Another dip in share price after my IBA shares, or perhaps we could draw something positive from the announcement? The result from Namibia's drilling is still pending. Can we read between the line that the drilling result is very good and thus it needs more money to continue the operation? The announcement didn't really affect DYL share price so far.. at this stage I will be content to wait and see.

Entitlement Issue.

For those who are not familiar with it, is similar to a rights issue except that an entitlement issue is non-renounceable, ie, the issue cannot be traded on to someone else. The shareholder being offered shares through an entitlement issue has the option of taking up the offer or allowing it to lapse. Small mining companies (as DYL) usually make entitlement, rather than rights, issues.

An entitlement issue, also known as an open offer, is an offer made by a quoted company to its shareholders inviting them to buy new shares in the company at a set price, which is normally lower than the current market price.

The purpose, as with a rights issue, is to raise new capital for the company.

The other way that entitlement issues differ from rights issues is that sometimes you will be allowed to apply for more than your strict entitlement under what is known as 'excess application'. Shareholders tell the company (or its registrar) how many shares they want to buy, including any excess shares, and pay over money to cover their application.

The company, before announcing the offer, will have determined how much capital it wants to raise, and the number of shares it needs to sell in order to raise the amount. When it has received all applications, it will either scale them back (if more shares have been applied for than it wants to sell) or it will issue all the shares requested (including any excess applications). If a shareholder's application is scaled back, he or she will be repaid funds for the shares not actually issued.

It is awfully easy for investors to get tempted by the prospect of buying discounted shares with an entitlement issue. But it is not always a certainty that you are getting a bargain.