Lots of discussion on the sell on the pop and buy back on the inevitable retrace -vs- the buy and hold strategy for this stock. Personally, I believe that the time is quickly drawing near as the risk is becoming greater on the in and out selling and rebuying. I still think we have at least a week maybe two before their is any substantial news that will move this stock leaps and bounds. Should the merger go through as anticipated (nothing is a certainty until the ink dries on the merger papers although this one looks and sounds pretty good)this stock will run quickly.
Going back to late February when the stock was sitting in the mid $.40's should you have sold on the "pop" and rebought back under $1.00 you could have made some serious scratch.
Let's assume a $10,000 investment at $.50/share (20,000 shares) sold at $1.20 on the first "pop" in February would have netted you $14,000. Re-investing the $24,000 when the stock dropped to $.80 8 sessions later would have you sitting on 30,000 shares. 3 days later selling that for $1.20 on the rebound pop would net you an additional $12,000. Re-investing that 19 days later at $.80 you'd be sitting on 52,500 shares (many of us picked up loads of shares on this particular pullback in early April). Should you have sold 8 days later at $1.20 you'd have had a $21,000 payday. 19 days later the price went under $1. Lets say you were waiting for $.80 but figured $1 was good so you picked up 73,500 shares at $1. You then sold yesterday at $1.15 for a profit of $11,025. And realize time is now short so ANYTHING close to around $1.05-$1.08 will be a buy to hold for the next run to $1.20. So you purchase 69,000 shares at $1.08 on Monday and will hold.
A link to the list of securities designated for short selling.
I have not develved into the requirements for a stock to be shorted in their market but I thought I remembered someone mention something about June as a possible time when it could be reviewed for that status? Not sure about that one though.
right, since there can be no selling short of EK, this is not riskless arbitrage as I originally thought, but it is risk arbitage. We are buying WITM in one market, and hoping to sell it (or not) in another for a profit.
... back in March in Philadelphia during the three city road show, Steven King mentioned they were in the process of interviewing investment bankers, one favorite at the time was Deutsche Bank. 73,114 employees, 73 countries, 1,717 branches. It will be the investment banks job to be sure that the world understands what the value of the merged company should be.
Does anyone know if the Bank of New York, which is going to underwrite the ADR program, is also NEW EASY KNIT's investment bank?
"Since there cannot be an 'arbitrage for this deal' the pps of 616 and WITM may not converge until the ADRs are issued, and maybe not then"
If the HK and American ADR version do not converge immediately upon opening of the ADR, I invite you bierlymary to join me in creating our own trading company.
As a team we can sit around all day buying the lessor exchange and then selling on the higher exchange immediately. We can make a mint. What do you say? ;o)
Of course they will eventually converge, there is no "maybe not then". People may be dumb, but the smart ones always fill in the gaps for the stupid. The gap will be closed within the first day of trading (likely the first few minutes).
I agree Mary. Worst case scenario: North American shareholder base remains clueless until the Instituional Investors weigh in and calm their irrational fears. Never mind that buying simply because Institutional Investors have bought is in itself irrational. Of course, investing without proper due diligence is also irrational, and most of WITM base must be in that category, or they wouldn't demonstrate such fickle trading patterns.
Also, Hong Kong investors in EK stock realize this merger is practically a done deal. So when WITM picks up several mines through LOI's prior to the merger, those same investors realize this will all eventually be part of the merged company, (or EK acquisition, from their perspective), and they are more likely to bid up the sp of EK as a result. And it is EK's sp that will matter at the time of ADR placement. It's a no-brainer win-win.
>>instead Wits would just chase EK higher as China can only buy EK<<
Since there cannot be an 'arbitrage for this deal' the pps of 616 and WITM may not converge until the ADRs are issued, and maybe not then. But prices should naturally reflect the value of the deal at some point.
But will 616.hk be allowed to be shorted? Before now they were not allowed to be shorted.
And since arbitrage for this deal would be go long 1 share WITM.ob and short 21 shares EK, then without the shorting possibility traditional arbitrage can't happen.
Also since it is so hard to buy/sell in US and HK doesn't it make it more unlikely for arbitrage to happen at all? I know it won't happen on the retail level because the Chinesse (for the most part) are not even allowed to invest outside of the China markets.
All this to me would actually be a good thing. Because instead of the two stocks converging (WITs higher, EK lower) to a happy medium, instead Wits would just chase EK higher as China can only buy EK. There would be little downward force from Arbitrage shorts on EK and knowing this WITS shares would chase up to EK levels knowing that conversion is entirely dependant on EK price.