Also, due to the competitive nature of investing, other investors are probably eyeing the same arbitrage opportunity as you. Meaning that there will be a surge of conversion and sale of shares, which will bring down the mother share price and reduce the arbitrage margin
Thanks KC for highlighting this issue. I hope paperplane learns his lesson this round. There are many traps in stock market. Don't be naive and go for quick profit. You will get burnt. This article is a must read for everybody.
in the 90s when there is clob and therefore abundance of liquidity from spore, u can arbitrage. without liquidity, mkt is not efficient. how to do that?
How about the undergraduate O&G SPACS trading below cash right now ? With expected annualized returns ranging from 10% to 14% to the expiry date, I would say they are close to risk free at current prices... just for discussion purpose....
Chonghai, sometimes this does happen...maybe 1-2 times of 10 times....example, Bornoil-WA's exercise price was being adjusted from RM1 to RM0.10 last year following the reduction in the par value of the mother shares...which gives a new lease of life to WA holders
hehe, murali notice! YES! ARBITRAGE HAPPEN in Malaysia! Ive seen them happen!Good example is takeover case where TP already known, yet market not reacting to it! Most of the time you get like 10-20% return!
same as asiabio many months ago...same as connect recently.... mother share sold 0.285 buy wa @ 0.15 realising an immediate 0.035 gain did the conversion @0.10 and ended up with the same holding all over again. By the time the listing of the conversion it was 0.20-0.21 ...now hovering @ 0.245 and warrants 0.13-0.135 a discount of roughly 10%
The only way To minimize these shark operators from fooling the public is Bursa has to speed up the time frame for the listing of conversions. That means instead of 2 weeks registras must apply the listing in 2-3days upon submission of warrants.
Its a laughing stock that warrants are trading @ a discount to its underlying stock.
As long as I make money, who cares???? KC chong, it is risky, but I can manage! as it is small compared to my total portfolio. So it is calculated risk
Posted by paperplane2 > Aug 7, 2015 01:48 PM | Report Abuse As long as I make money, who cares???? KC chong, it is risky, but I can manage! as it is small compared to my total portfolio. So it is calculated risk
Don't get me wrong that I am saying that you should never do risk arbitrage. It is a very powerful concept in investing as I have said.
I myself constantly looking for arbitrage opportunity, I mean risk arbitrage. There ain't any risk-free arbitrage around. I wrote about a few of risk arbitrages in i3investor before. The first one was KHSB which was a very successful arbitrage taken by me as there was no manipulation by anyone in this stock.
This there is the limitation that nobody can do anything about the price-value diversion, at least for now.
So there is high probability that one can make money from risk arbitrage if he understand the diversion of price Vs value. But beware that most of the time, there won't be big fat frog jumping around. So never put all your eggs there.
Asdion is a clear and present example. The share price of the underlying share has dropped from RM1.50 to less than RM1 now, for a loss of 35% in just three weeks. For those thinking of arbitraging the warrant got hurt, badly. This is a clear manipulation of somebody.
thanks for sharing KC CHONG... appreciate ur kind time for analysis always.............
I have feeling another 25 years my English also cant as good as urs. KC CHONG, I love FA so I never miss all your FA write up.
KC CHONG, may I request if possible to re-analyze VS's financial performance on next QR report. I like to learn should they have certain improvement in facts and figures after the expansion. No doubt CIMB presents an attractive TP of RM7.10(almost similar with KYY's) but no harm to do an analysis before & after business growth.
someone jealous on my 17% return in short time! I take kc view positively. Yes, who dunno tey por yee like manipulate shr price! I managed to take money from his mouth! if you so damn good, show me you can also? Why not?
is ok la.... I tak buat hal in i3 anymore... I say sorry and walk away recently.... I really tak berani buat hal ad..... now go back to my silent world only..... I scared KC CHONG treat me as GREEN FROG PRINCE...
hey KC CHONG, you like to eat Claypot Green Frog? The very very GREEN type? I always see KC CHONG very serious. I dare not to say hello to him also...... but me ada curi curi read his FA analysis la.....
same same ma.. Icon8888 I read n re-read all ur stock write up.. I love the way u contribute also ma... I enjoy in reading ur blog ma...
KC CHONG, Icon8888 and paperplane2... Happy weekend. Bye for now.
Posted by duitKWSPkita > Aug 7, 2015 04:34 PM | Report Abuse
I have feeling another 25 years my English also cant as good as urs. KC CHONG, I love FA so I never miss all your FA write up.
DUIT, ARE YOU KIDDING? I ONLY STARTED TO LEARN "HUMPTY DUMBTY SAT ON A WALL" WHEN I WAS 13 YEARS OLD!
KC CHONG, may I request if possible to re-analyze VS's financial performance on next QR report. I like to learn should they have certain improvement in facts and figures after the expansion. No doubt CIMB presents an attractive TP of RM7.10(almost similar with KYY's) but no harm to do an analysis before & after business growth.
DUIT, ARE YOU KIDDING AGAIN? THE PERSON WHO KNOWS V.S IS THE ONE MENTIONED IN YOUR POST HERE. NOT ME. I AM JUST UNINFORMED CRITIC.
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Posted by soojinhou > 2015-08-06 20:35 | Report Abuse
Also, due to the competitive nature of investing, other investors are probably eyeing the same arbitrage opportunity as you. Meaning that there will be a surge of conversion and sale of shares, which will bring down the mother share price and reduce the arbitrage margin