Reflections on a takeover bid
Posted: April 25th, 2024, 10:39 pm
Evening All.
As many of you are no doubt aware, there has been a takeover battle for SMDS. Initially, MNDI made a takeover offer which was trumped by IP (US-listed International Paper).
I am used to investing in Investment Trusts and ETF's - only in the last couple of years have I invested in individual companies as part of a P-HYP (Pseudo HYP) experiment. Hence, via my holding in SMDS (and MNDI also, coincidentally) this is the first time I have had direct exposure to a takeover battle.
As we sit here now, I retain my holding of c600 SMDS shares, which keen observers will understand means I have currently left a little over £400 on the table, though MNDI has recovered somewhat mitigating that a bit. I am OK with letting things continue to play out and finish where they will, which would arguably be consistent with some HYP purist approaches - it's relatively small beer. However, there must also be an argument that I could/should have done something nearer the short term peak, as some did as noted here:
Hence the question I'm reflecting on, especially if it's a more substantial amount at stake next time, is should I have and if so, what?
Where I'm currently at is that in all-scrip takeover battles, it's probably wise to do something when the second bidder comes formally into play (I think it is different when its mostly/all cash, where changes in the share price of the winning bidder or withdrawal of the losing bidder is less likely to have a material impact - probably just hold in this case). My line of thinking is that, were the situation to rhyme in the future, to
I've done some investigation of the price movements during the large drop on 19th April and whilst from a high level, it appears to gap lower, there were actually ups and downs during the day. This suggests that once the stop-loss is triggered, you can probably get out at or very close to the price. If I faced the situation tomorrow, I would probably choose to put a 10% trailing stop loss market order for 100% of the holding. I have looked closely at how to place such an order on IBKR - seems straightforward enough and I am now prepared for next time.
Anybody else ruminating on this - with similar or different thoughts?
Regards, Newroad
As many of you are no doubt aware, there has been a takeover battle for SMDS. Initially, MNDI made a takeover offer which was trumped by IP (US-listed International Paper).
I am used to investing in Investment Trusts and ETF's - only in the last couple of years have I invested in individual companies as part of a P-HYP (Pseudo HYP) experiment. Hence, via my holding in SMDS (and MNDI also, coincidentally) this is the first time I have had direct exposure to a takeover battle.
As we sit here now, I retain my holding of c600 SMDS shares, which keen observers will understand means I have currently left a little over £400 on the table, though MNDI has recovered somewhat mitigating that a bit. I am OK with letting things continue to play out and finish where they will, which would arguably be consistent with some HYP purist approaches - it's relatively small beer. However, there must also be an argument that I could/should have done something nearer the short term peak, as some did as noted here:
Hence the question I'm reflecting on, especially if it's a more substantial amount at stake next time, is should I have and if so, what?
Where I'm currently at is that in all-scrip takeover battles, it's probably wise to do something when the second bidder comes formally into play (I think it is different when its mostly/all cash, where changes in the share price of the winning bidder or withdrawal of the losing bidder is less likely to have a material impact - probably just hold in this case). My line of thinking is that, were the situation to rhyme in the future, to
- Place a trailing stop sell order, probably market not limit
At a discount of either 5% or 10%
For either 50% or 100% of the holding
I've done some investigation of the price movements during the large drop on 19th April and whilst from a high level, it appears to gap lower, there were actually ups and downs during the day. This suggests that once the stop-loss is triggered, you can probably get out at or very close to the price. If I faced the situation tomorrow, I would probably choose to put a 10% trailing stop loss market order for 100% of the holding. I have looked closely at how to place such an order on IBKR - seems straightforward enough and I am now prepared for next time.
Anybody else ruminating on this - with similar or different thoughts?
Regards, Newroad