MQG - Macquarie Group

[investorpaul]

Has anyone else been surprised how firmly MQG held today? They actually closed up! I thought for certain they would be down after the Capital Raising announcement.

As a MQG shareholder Im not complaining though. As long as they are trading above 26.60 on 5 June 09 Ill make a nice arbitrage profit.

I thought MQG would get slaughtered today, it would have been helped though by positive move of the overall market and perhaps people view the capital raising as a positive move as it will allow MQG to acquire sold companies/assets at near rock bottom prices.

Interesting day non the less.

 

[hecko]

So what are people out there thinking about this capital raising? On paper it looks good and the institutional offer hasn't caused the price to drop, but I dont know if the same will remain true for the offer open to the general public. The 10k would be a stretch but even considering going in for the 15k if the price remains stable. Or is the price going to tonk?

 

[cutz]

So what are people out there thinking about this capital raising? On paper it looks good and the institutional offer hasn't caused the price to drop, but I dont know if the same will remain true for the offer open to the general public. The 10k would be a stretch but even considering going in for the 15k if the price remains stable. Or is the price going to tonk?

G'Day Hecko.

Personally I don’t know which way the price will trend in the coming months but seeing you asked I read something interesting in the Financial Review today, it seems that David Clarke offloaded 153296 shares at $35.50 each on market on the 8 and 11 of May ( what impeccable timing ), and QUOTE " A source informed of Mr Clarke's intentions said the securities had been sold to finance the extension of a zero cost collar and the repayment of a loan" END QUOTE, it's on page 14 if anybody is interested.

Not implying this is good or bad, just something of interest to MQG enthusiasts. (BTW I’m one of them)

I should pay closer attention to company news releases.

 

[ROE]

So what are people out there thinking about this capital raising? On paper it looks good and the institutional offer hasn't caused the price to drop, but I dont know if the same will remain true for the offer open to the general public. The 10k would be a stretch but even considering going in for the 15k if the price remains stable. Or is the price going to tonk?

This is the mob that keep telling the market, we got load of cash, we are over capitalise, we can handle anything... then Boom capital raising? Doesn't it smell a little fishy?

I wonder if you tell your friends you have lot of money but have to borrow $2000 from your mum to buy a new LCD.
do your friends think you have lot of cash or you are Pinocchio

 

[hecko]

This is the mob that keep telling the market, we got load of cash, we are over capitalise, we can handle anything... then Boom capital raising? Doesn't it smell a little fishy?

I wonder if you tell your friends you have lot of money but have to borrow $2000 from your mum to buy a new LCD.
do your friends think you have lot of cash or you are Pinocchio

Point taken, but there is a heap of companies capital raising at the moment... on face value this looks like a great arbitrage opportunity, just interested in any other peoples thoughts on the deal?

 

[glads262]

Point taken, but there is a heap of companies capital raising at the moment... on face value this looks like a great arbitrage opportunity, just interested in any other peoples thoughts on the deal?

I am a long term holder.
I am going to wait until the last possible moment to B-Pay my funds.
If the SP drops in the next two weeks, I may not participate at all.
I think a lot of people are going to sell their holdings to pay for the SPP.
Quite a lot are doing so now - hence the drop in the last 3 days trading.
There are going to be a stack of people who have borrowed funds to buy the SPP due to the arbitrage ($6 profit per share at the moment)
These guys will all be selling early June on the day the shares hit.
So don't think because it looks like an easy profit now that it will all be smooth trading. There are still risks.
I will be one of the lemmings selling on the day the shares issue...
Also, the placement will be scaled back quite a bit if the share price stays high, because everyone will apply for the full $15000.
And, the less the issue is scaled back, the more shares the above holders will have to sell - ie the SP will fall harder.
Its a catch-22 really...

 

[moreld]

Re: MQG - Macquarie Group SPP

MQG have a market cap of $10+ billion, the SPP is likely to be in the range of $200-500M (my WAG) i.e. 2-5% of outstanding shares.
Average daily turnover is around $70M.

If half those buying are looking to sell after shares issued that would put $100-250M of shares on the market. Which is a small overhang and unlikely to have much of an impact. I doubt half will be selling for a number of reasons.
1. A lot of people will have already sold some MQG to raise funds and adjust their weighting. They were selling while the share price was rising.
2. Of those remaining only some will be looking to sell.
3. 3. Not all of them will look to sell right away.

Arbitrage is a risk free transaction. Participating in the SPP is not risk free. There are two weeks between application close and share trading. With current market volatility two weeks is a long time. The average three week volatility as measured by difference between high and low over that period for the last year is 35%, i.e. from the start of next week (last week to apply) to the soonest opportunity you get to sell the price difference between high and low has on average been 35%.

In 13 of the 52 rolling periods the price difference has been over 50%.

Not everyone will apply for the whole $15k.
I too will be waiting to final day to enter my SPP.
Just my thoughts YMMV

 

[hecko]

Thanks moreld and glads262, I have been into the share market for 7 years now, but there are times where I feel like a complete newbie so its good to exchange some ideas!

 

[Garpal Gumnut]

Re: MQG - Macquarie Group SPP

I am a long term holder.
I am going to wait until the last possible moment to B-Pay my funds.
If the SP drops in the next two weeks, I may not participate at all.
I think a lot of people are going to sell their holdings to pay for the SPP.
Quite a lot are doing so now - hence the drop in the last 3 days trading.
There are going to be a stack of people who have borrowed funds to buy the SPP due to the arbitrage ($6 profit per share at the moment)
These guys will all be selling early June on the day the shares hit.
So don't think because it looks like an easy profit now that it will all be smooth trading. There are still risks.
I will be one of the lemmings selling on the day the shares issue...
Also, the placement will be scaled back quite a bit if the share price stays high, because everyone will apply for the full $15000.
And, the less the issue is scaled back, the more shares the above holders will have to sell - ie the SP will fall harder.
Its a catch-22 really...

MQG have a market cap of $10+ billion, the SPP is likely to be in the range of $200-500M (my WAG) i.e. 2-5% of outstanding shares.
Average daily turnover is around $70M.

If half those buying are looking to sell after shares issued that would put $100-250M of shares on the market. Which is a small overhang and unlikely to have much of an impact. I doubt half will be selling for a number of reasons.
1. A lot of people will have already sold some MQG to raise funds and adjust their weighting. They were selling while the share price was rising.
2. Of those remaining only some will be looking to sell.
3. 3. Not all of them will look to sell right away.

Arbitrage is a risk free transaction. Participating in the SPP is not risk free. There are two weeks between application close and share trading. With current market volatility two weeks is a long time. The average three week volatility as measured by difference between high and low over that period for the last year is 35%, i.e. from the start of next week (last week to apply) to the soonest opportunity you get to sell the price difference between high and low has on average been 35%.

In 13 of the 52 rolling periods the price difference has been over 50%.

Not everyone will apply for the whole $15k.
I too will be waiting to final day to enter my SPP.
Just my thoughts YMMV

One of the things you guys are forgetting is that the reason for the raising, spp, is not to enrich the shareholders but to shore up their balance sheet.

That means their balance sheet is in some strife looking forward.

Perhaps selling now as one of the board or executive did recently and buying back after you guys have done your dough may be a better strategy.

gg

 

[glads262]

Re: MQG - Macquarie Group SPP

One of the things you guys are forgetting is that the reason for the raising, spp, is not to enrich the shareholders but to shore up their balance sheet.

That means their balance sheet is in some strife looking forward.

Perhaps selling now as one of the board or executive did recently and buying back after you guys have done your dough may be a better strategy.

gg

I don't agree gg. They are not shoring up their balance sheet. it is already strong.
The monkey is $1billion in writedowns on listed funds - capital surplus is already $3billion.
I don't think this capital raising means more writedowns to come. I think it means more acquisitions to come at bargain prices.
If they raise $1billion, they can spend this to generate $100-$200million a year in profits - maybe more depending on the asset.
Maybe in the short term (2-3 years) any asset they purchase could return profit of $3-400million a year?? In which case, the capital raising is well worth the dilution.

 

[Garpal Gumnut]

Re: MQG - Macquarie Group SPP

I don't agree gg. They are not shoring up their balance sheet. it is already strong.
The monkey is $1billion in writedowns on listed funds - capital surplus is already $3billion.
I don't think this capital raising means more writedowns to come. I think it means more acquisitions to come at bargain prices.
If they raise $1billion, they can spend this to generate $100-$200million a year in profits - maybe more depending on the asset.
Maybe in the short term (2-3 years) any asset they purchase could return profit of $3-400million a year?? In which case, the capital raising is well worth the dilution.

It depends I suppose on whether you feel we are at the bottom, I don't, one more insult to global well being such as swine flu pnademic and many of MQG's satellites will be in deep trouble, less cash going back to MQG and a lower share price.

gg

 

[glads262]

Re: MQG - Macquarie Group SPP

It depends I suppose on whether you feel we are at the bottom, I don't, one more insult to global well being such as swine flu pnademic and many of MQG's satellites will be in deep trouble, less cash going back to MQG and a lower share price.

gg

I still disagree. My view is that world economic growth will recover slightly. It is already "less negative" than late last year.
Most of MQG listed assets are producing higher income now than they were this time last year. They are still making money. Its just that the market is valuing them for much less.
Take the MCG? fund takeover offer. This offer was exactly what MQG had the asset on its books for.
If MQG find a buyer for MAP, do you seriously think someone is going to get Sydney airport for half the price it was worth last year?? Sydney airport increased its profits last 12 months.

I think the time for corporate casualties in Australia is over. Most co's that were in "trouble" have now raised or are raising capital. There are no more monkeys in the closet. Business is now getting on with what business does - turn a higher profit. MQG, I believe, is no different.

 

[babka]

I, as a shareholder (long term) totally agree with Glads posts and his way of thinking. I really have nothing new to add to his good posts. As far as GG is concerned, it has been known ,that MQG is not his "darling" to say the least.

 

[Garpal Gumnut]

I, as a shareholder (long term) totally agree with Glads posts and his way of thinking. I really have nothing new to add to his good posts. As far as GG is concerned, it has been known ,that MQG is not his "darling" to say the least.

Agree, its a bit like the Englsh parliament at present, the sooner it goes the sooner we will get back to honest banking and investment in this country. Too much free money for little work. Too many fees. Too many incestous relationships with satellites. Believe me it will go.

gg

 

[wonderrman]

Re: MQG - Macquarie Group SPP

I still disagree. My view is that world economic growth will recover slightly. It is already "less negative" than late last year.

There are no more monkeys in the closet. Business is now getting on with what business does - turn a higher profit. .

Your view that growth will recover slighty is due to government intervention, or money printing. This is what the governments of the world have been doing and it only covers over the problem, the debt - the main cause of this "melt down" is still there, for me governments are only prolonging the problem. But they never learn. We have crisis every few years and they always do the same thing.

No more monkeys in the closest - I wouldn't speak to soon mate, we're not going to recover over night at just because we've moved up ~800 points since March doesn't mean we can't wipe that off again. Economically we are still in a very bad shape, as you would know the stock market is not the economy, a lot of damage has been done to the Baltic Dry Index and this is not going to recover over night either.

wonder.

 

[ccasta]

Complete Newbie questions i know, but have to ask:

1. The SPP offer states that "Shares issued under the SPP will not be eligible for the final 2009 dividend for the year ended 31 March 2009 to be paid on 3 July 2009". If I were to sell them when they start trading on the 12th June, does the restriction regarding ineligibility of these shares for the final 2009 dividend go with it? If so, how does this work?

2. In view of the above, can i somehow choose to sell only the shares bought under SPP and keep my original holdings?

 

[Garpal Gumnut]

Re: MQG - Macquarie Group SPP

I still disagree. My view is that world economic growth will recover slightly. It is already "less negative" than late last year.
Most of MQG listed assets are producing higher income now than they were this time last year. They are still making money. Its just that the market is valuing them for much less.
Take the MCG? fund takeover offer. This offer was exactly what MQG had the asset on its books for.
If MQG find a buyer for MAP, do you seriously think someone is going to get Sydney airport for half the price it was worth last year?? Sydney airport increased its profits last 12 months.

I think the time for corporate casualties in Australia is over. Most co's that were in "trouble" have now raised or are raising capital. There are no more monkeys in the closet. Business is now getting on with what business does - turn a higher profit. MQG, I believe, is no different.

One reason for the rise in all share prices over thee last few months, including MQG's could be to make the returns for listed, non listed and super funds look better on June 30th.

I myself would not, if I were a fundamentalist, which I'm not, go anywhere near a SPP or a stock like MQG until after 30th June, well after.

gg

 

[GumbyLearner]

Re: MQG - Macquarie Group SPP

Your view that growth will recover slighty is due to government intervention, or money printing. This is what the governments of the world have been doing and it only covers over the problem, the debt - the main cause of this "melt down" is still there, for me governments are only prolonging the problem. But they never learn. We have crisis every few years and they always do the same thing.

No more monkeys in the closest - I wouldn't speak to soon mate, we're not going to recover over night at just because we've moved up ~800 points since March doesn't mean we can't wipe that off again. Economically we are still in a very bad shape, as you would know the stock market is not the economy, a lot of damage has been done to the Baltic Dry Index and this is not going to recover over night either.

wonder.

Exactly wonderr.

Still plenty bulk carriers idle in the Straits of Salamis.

The news out of Japan's ecomony today is horrific, I wonder how much business they are getting in Japan. I know the Japanese Government are handing-out money at the moment. But the NIKKEI is UP !

I can hear the Bay 13 mob respond in chorus to a rejected LBW appeal.

What a load of rubbish! What a load of rubbish!

 

[YELNATS]

Complete Newbie questions i know, but have to ask:

1. The SPP offer states that "Shares issued under the SPP will not be eligible for the final 2009 dividend for the year ended 31 March 2009 to be paid on 3 July 2009". If I were to sell them when they start trading on the 12th June, does the restriction regarding ineligibility of these shares for the final 2009 dividend go with it? If so, how does this work?

2. In view of the above, can i somehow choose to sell only the shares bought under SPP and keep my original holdings?

1. Yes, as the shares issued to retail investors under the SPP are not entitled to this dividend. Only shares held at the end of business on the business day prior to the ex-div date of 11/05/09 (ie. at eod on May 8) will get this div.

2, Yes, of course, and you will still get the div for the number of shares held by you at eod May 8.

 

[The Mint Man]

Re: SPP..
I think my question has been covered but I will ask just to be sure. Are we able to buy the shares at $26.60 and sell our shares at a higher price? providing they are still above that of course.
And at what point does the 5% discount based on the previous 5 days volume weighted average come into effect? below the issue price?

Cheers