ConcernedCitizen~BU finds it very interesting that two years ago BS&T was trading at over $8.00 (2005), $5.31 (2006) and up to yesterday $5.51. Although the share prices from our research have taken a beating in the Caribbean, BU find it strange the precipitous drop in the BS&T share price compare to other companies. What is it that the market sniffed about BS&T?
BU smells something funny
Posted on BU -3rd July 2007
A poster to BU made the quoted observation on the 3rd July 2007 and to our surprise in the Nation this morning we see the headline BS&T Shares Lockdown. What BU finds intriguing is the length of time it took for the industry regulator, Barbados Stock Exchange to suspend trading in a transaction where there was sure to be heightened interest given the nature of the deal. It is Barbados lone conglomerate and the market as we have seen will speculate and manipulate if allowed.
We visited the BSE website to view the trade summaries of the days being investigated, see attached. A novice scan of the reports clearly show that the share price has been allowed to move from $5.51 on the 2 July to $6.66 on the 6 July 2007. The is a clear manipulation of the share price which was done under the nose of the BSE. The significant movement in the share price has huge financial implications given what is at stake.
All members of the Board should resign immediately.
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This supposed “manipulation” is baloney and caused by the exchanges rules that limit the change in price per day to 10%.
Everybody knows that this deal is going to eventually close at more than 10% over the pre-announcement price of $5.51. The problem is that no one can transact at the prices that most people are speculating because of this rule. Someone, probably a largeish institutional holder, perhaps a mutual fund, will want to have the prices reflect market sentiment and be reflected in their NAV’s and performance. So they probably have used these 1,000 share transactions to bump it up on the market. But it makes perfect sense to me – I see nothing wrong here.
Sometimes our regulators seem a little shy, overly cautious and supremely conservative – this is probably a good thing in most cases. But for Marlon Yarde or anyone else to accuse people of manipulation when the market is only now starting to reflect the “market value” of this stock is a bunch of baloney.
People shoudl be free to transact and speculate as they see fit around this deal.
K~if a few brokers get in a room and trade at one price and the very last transaction of the day in a specific stock they conspire to do the last trade at -10% to deliberate close at a lower price, what would you call that? The reverse action is possible as well.
In BU’s opinion that is manipulation which is separate from a company optimizing it assets to achieve an accepted rate of return on assets/low operating efficiency etc. Now if the market which is comprised of institutional investors, financial analysts and others could read these good indicators in the balance sheets of the listed companies in Barbados, just maybe the confidence in the stock market would rise. Instead many Barbadians are aware that most of the listed companies are undervalued land sadly inked to poor management.
Oh please, that is not even a close analogy.
Look at BS&t’s balance sheet. Lots of property that’s been revalued and now probably fairly represented in terms of value, and decent performance since Tony King took the reigns. Now compare the book value of shares (somewhere around $7) to what had been the market value of shares at the time (5.50) add in a dose of takeover bidding war and you have a catalyst for an increase in the price to a more reasonable market value. In this case the difference between the actual trading price and what most people would consider a fair value was greater than the 10% limit imposed by the BSE, how else is the price going to be adjusted? Regulators can’t do it. It has to be done through trading blocks of at least 1,000 shares.
Plus it’s not like its the company manipulating shares, they obviously don’t think it’s worth $7 given the ridiculous N&M deal. This is investors trying to get the price to where they feel it will trade – it is necessary or else the trading would be stalemated by the rule.
K~trust me when I say that we understand and agree with your logic. The reality of the situation however is that when Ansa Mcal declared their interest in the BS&T transaction followed by the local consortium who indicated their desire to buy available shares to own enough of a block to influence proceeding at the deferred special BS&T shareholders meeting the BSE SHOULD have suspended trading to prevent what the local consortium admits to doing in the Nation this morning. They have done nothing wrong, but by not suspending trading they have allowed the local consortium to legally manipulate the price.
The fact that the stock is under valued is another matter.
but by suspending trading they prevent ALL market particpants, including myself, from trading around this event. That is too active a role for the BSE to take in my opinion. If I wanted to sell now to the consortium becasue I might have a view than the N&M deal will win at 5.50, they are preventing me from making profits. Also if I felt that the bid will continue to rise and wanted to buy now they prevent that as well. I lose confidence in the market not becasue people are trading around a huge event like this, I lose confidence in a market that prevents me from trading my shares in what should be a relatively free and open manner. It’s too activist on their part.
K~we agree with you, please forgive us for playing a role but we detected that you seem to be familiar with these matters and wanted to encourage a debate to bring info to the table. In fact the market vendor which is a radio character here on a radio show made the point this morning that when the market price drops the BSE does not jump in to protect investors so why should they do so now to stop speculators from making money.
indeed – and no need to forgive, I enjoy the banter.