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