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SPDR Gold Shares Message Board

  • gotgoldies10 gotgoldies10 Jan 30, 2013 2:53 PM Flag

    Firm recommends dumping Aurico Gold

    I fully attribute this weakness to management. There were other buybacks announced recently, but they gave the firm the flexibility to wait and did not lay out a floor for the price.

    Based on the fact that the buyback was oversubscribed (they announced that 123M shares, half the shares outstanding, were tendered but only 36.1M shares were bought -- that's less than 30% per investor) were filled, investors should expect a wave of selling when investors receive their untouched shares (which is expected to happen in a few days). Long-term investors holding almost half of the shares of the company felt that the stock was overvalued at 8.30!

    Given the downward pressure, I expect a position that is long in physical gold and short in AUQ to give solid returns over the next few days as investors receive their shares and the flippers (who bought with the hopes of flipping into the buyback for a quick profit) try to find others to hold their inventory.

    Additional disclosure: I am long gold and short AUQ.
    -------------------------------------------------------

    Money manager is short Gold miners. 3 Gold coins for 1000 shares???

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    • As I am pretty sure you are aware, many shares were tendered for a price in the 9's, and of course those would be returned. It could mean that less than 30% thought they were worth only 8.30. So your statement that long term investors felt the stock was overvalued at 8.30 seems disingenuous.

      • 2 Replies to fatfighter59
      • I'm guessing the author looked at the numbers and saw that those tendering above 8.30 represented a small portion of the shares:

        Jan 29: "... has taken up and paid for 36,144,578 common shares ..."

        Jan 29: "Shareholders that validly tendered at the Purchase Price had approximately 34.3% of their tendered Shares purchased by AuRico"

        Jan 25: "Approximately 123,174,377 Shares were properly tendered to the Offer."

        Working backwards, the less than 30% figure comes from 36144578/123174377. = 0.2934423447499962 (which, strictly speaking, is the most salient figure)

        The 34.3% refers to shares tendered at 8.30, which means that 36144578/.343 = 105,377,778 (105.4M) shares were tendered at 8.30 and the rest (17.6M) were tendered between 8.30 and 9.30. That's all that can definitively be said about the buyout. It's not known how many of those 17.6M shares were tendered above 9, but we can definitively say that at least 37.2% of the shares were tendered at 8.30.

      • That is news for today.

 
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