Forum Archive Index - August 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

David,

 

1. We started with a limited quiz on July 17, 2001, as to what the price of RBC would be tonight.

 

Some mentioned a price of 84-85 cents. Michael Gore thought that it could be 80 cents. I agreed with him and suggested that the shares could be bought back @ 79-80 cents.

 

Initially, the stock was selling at those numbers but then they started to pay 81 cents for large parcels.

 

Later, the stock was introduced to the 40 index. We worked on a some scenarios which started on Friday, Aug. 11, 20.16 hrs and were completed on Mon. Aug. 13, 18.10 hrs.

 

They were based on events to occur within a 24 hours time frame. It was accepted that RBC were still buying back shares immediately before the scenarios were to take effect.

 

Ben Mathus calculated a NTA / share of $ 1.053 based on shares to be bought back @ 80 cents.

 

Later, some large parcels passed @ 82-83 cents and even taking into account the remaining shares to be sold at much lower prices, I estimate that the NTA will not be less than $1.04. 

 

2. I published the results from the buyback from time to time to draw the attention of RBC holders who may have wanted to sell. ( I am not a trader and never give any advice as to when to sell ).

 

On Aug. 24, I warned that RBC could not allow a long interval between the last buyback and an announcement of any developments. 

 

Traders would have taken notice of that remark and when sales suddenly speeded up and a large parcel from CS Boston ( RBC's broker) were bought, I noticed many privately held parcels being bought back by RBC.

 

Others may have thought that the share price could go as high as 95 cents, held back and may well be trying to unload the shares now, as they need cash. 

 

3. There would have been no problems, had RBC staggered the buyback to make it last till some announcement from the CNIF Receiver or from FFS was due.

 

However, they may have had some obligations to the large holders or perhaps some news is on the way, and RBC did not want to be left with cash and a rising share price to come, perhaps. 

 

It is difficult to compare this stock with others; it has a large FFS component and with it, expectations.

 

My own opinion is that RBC should not sell below a price of ( NTA - 25% ). We already know that the NTA ought to be at least $ 1.04.

 

Therefore, unless management makes further adjustments to their NTA, the share price ought to be at least 78 cents.

 

There are still a lot of RBC shares held in private hands and that could depress the share price somewhat. As Nick Wigley put it some time ago " Will there be a retracement to the mid seventies? ". The current price is 74-75 cents.

 

The sharemarkets are in a negative phase and this does not help matters. As I am a longer term holder, I won't sell and am also curious about the ' state of play ' of upcoming events, a good reason for holding, in my opinion.

 

Others may have a different opinion. Any comments are appreciated.

 

Gerry