Read? Noble : 1 to 1 Right Issue @ $0.11
Hope this email finds you well.
Wish to ask you for your opinion on Noble Group. I believe you have held the stock for a long period and are still holding onto the stock now. Do you regret not selling it back then?
With the company in such turmoil now, would you still subcribe to the rights offer and hold onto the stock? If yes, why yes?
Appreciate your kind advice.
Either we have Stop-loss or we have the Ball to play till the end of the Game. If we lose, we lost 100%! But if we win; we will win N x 100%.
So we have to decide whether we have the Ball to play this type of Game or quit the Game sooner with Stop-Loss!
Uncle8888 has big ball so don't anyhow follow him!
Now here is the Maths for the above silent reader to decide for himself.
Purchase price : $1.10
Right issue: $0.11
Cost of right issue as premium paid to stay in the Game = $0.11/$1.10 = 10%
The cost of the premium is 10% of the original purchase price.
Market closing of Noble before announcement of right issue = $0.30
To breakeven on his purchase price of $1.10, Noble will have to recover by 267%
Let assume he subscribes fully for his right issue
Average price after 1 to 1 XR = ($1.10 + $0.11)/ 2 = $0.61
Average down by -45%
Theoretical price after XR = $0.30+$0.11 = $0.205
To breakeven on his new investment cost (purchase price of $1.10 + right issue of $0.11), Noble will have to recover by 195%
What did you see after XR subscription?
267% vs. 195%
Average down vs EPS
Average down by -45% and EPS down by -50% after XR
Knowing that after the dust has settled; the Founder Chairman will be out. A new Noble chairman most likely to be nominated by CIC to take care of its own interests and a new CEO may be nominated by CIC if the current two Co-CEOs can't make it. Don't forget Noble is still a global trading power house. CIC will not let it fail.
The Past is not the Present. The Present is not the Future.
Is 10% premium paid too much of good money to throw after bad money to stay in the Game or to take more than 70% to 80% cut losses to re-invest?
Oh .. the greatest relief is I have sold!