Tuesday, 15 November 2011

LMIR 15 Nov 2011

LMIR mother shares at closing: $0.365
LMIR rights at closing: $0.026

Estimated post-rights yield: $0.0326
Mother shares CD: $0.0106 (xd will appear tomorrow on 16 Nov 2011)

By doing a simple calculation, (0.365-0.0106)-(0.31+0.026) =  0.0184.

It is actually more worth it to get the right shares instead. (Of course this exclude transaction cost.)

The interesting thing will come tomorrow where mother share goes xd.

Theoretically, mother share will become 0.365-0.0106 = 0.3544 (most of the time, the price will drop more than divy, thus I guess it will become lower to around 0.345)

How will the right share react?

Disclaimer: The below is solely my guess.
If mother share drop by 1 cent, will right share drop even more? The lowest today is 0.02. My guess it might drop below 0.02. If it hit 0.016, the yield will become 10%. I believe this is a magic point where many will whack at this price. A support? Likely.  If it drop much lower than that, it would be a bonus for those who want to acquire this share cheaply.

Will we reach 0.001? Let's wait and see tomorrow.

My action:
I am a current shareholder.

If mother share did not drop below 0.31, i will pay for my rights and apply excess.
If mother share drop below 0.31, I will buy mother shares instead.

As for the rights, I am not sure if I will go and purchase rights even if it hit 0.016 as I do not want to disobey my rule of investment where the % for any stock should not be more than certain %. 


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