GTP 0.00% 12.0¢ great southern limited

GTP - Great Southern Plantation

  1. 10,605 Posts.
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    Very painful learning experience going on here for all involved with GTP atm !!

    I posted last week that I would do some research on the movements of stocks that had made substantial special dividend returns to shareholders and that had also incorporated dividend reinvestment plans as an option for the use of those dividends.

    Well, here is the outcome - I could not find one single similar situation of a company paying a dividend amounting (in GTP's case at least) to 30% of the value of the stock pre the news leaking to the market - backing the dividend up with a DRP offering a 10% discount underwritten (ie I presume that any shareholder who elects to take cash will have that cash paid by the underwriter who will pick up the shares resulting in what would effectively be a 100% takeup of the DRP) and then extending the trading period for calculation of the average price to 30 trading days.

    I posted early this week that my initial calculations gave fair value at around the low 80c but that it was in the interests of some shareholders to now see the price driven down as low as possible during the DRP calculation period. Those shareholders would obviously be the ones electing to participate in the DRP.

    For the first three days of the calculation period the GTP price has been driven down by aggressive selling which on close of market left a spread of between 4 and 5 cents between buyers and sellers but most tellingly the spread was being created by the seller withdrawing residual stock from market depth each evening before hitting the sellers again the next morning.

    Now its turning into an all out rout as spooked shareholders join the rush fearing that the price is a reflection of some other problem.

    Personally, I would very much doubt that GTP will be using a thirty day calculation period ever again as the result is clearly an invitation to have the share price trashed and manipulated for nearly a month and a half.

    But the really valuable lessons are -

    1/ If you are taking the cash option sell into the gap leading up to the record date whilst it is built into the cum-dividend share price.

    2/ If you are taking the DRP sell the physical stock the day after the close of books and buy back on weakness during the calculation period whilst the stock price is being crunched.

    Anyway, so much for the 20/20 hindsight. I am a buyer at these distressed levels to suppliment the increasingly large number of shares I will be getting from the DRP.

    And what is a fair market price atm ? My charts suggested a bottom at around 71/72c and I think that will probably be the case over the period of the DRP calc despite the price currently trading as low as 66c. So, if I can buy below that it is a bargain imho!

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