Good to hear from you. I did not say that I agreed with the theory of the
rational investor or efficient markets, your putting words in my mouth here
(or should it be bits in my bit stream?), but was merely giving a simple
situation that on face value looked like an interesting example of where
they were not.
I can't see your logic in regards to the bank draft at all. For one you
could arrange one over the phone for about $20- $50 which means that for
the transaction to be uneconomic the investors would have had to have a total
share holding of roughly only $200- $500. Unlikely.
And concerning the question of whether the company should have advised its
owners to pay in US$. is "no" the best that you can come up with. For a
WW 1 veteran (and my hero) you disappoint me Snoopy. Taking for granted
that RCH would have already arranged forward currency cover for the rights
issue to reduce their risk of an adverse currency movement. It would have
been a fine goodwill act on the company's behalf to advise its shareholders
at the beginning of the rights issue to pay in $US if in between the issue
date and the closing date of the issue the $US appreciated against the $NZ.
In my opinion this issue of integrity is oneof the reasons that
our market is seen as one from the 'wild west' from the perspective of mum
an dad investors and precludes their involvement - Mark Weldon can see this
fact better than anyone. If you think about it in the end this has ramifications
for all investors, including you Snoopy.
See IRG research reports
