Here’s how not to run an equity portfolio:
RNS Number : 7994S
Stanley Gibbons Group PLC
29 September 2014
THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
Recommended Cash Offer
The Fine Art Auction Group Limited
(a wholly owned subsidiary of The Stanley Gibbons Group plc)
The boards of Mallett and Stanley Gibbons are today pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by TFAAG, a wholly-owned subsidiary of Stanley Gibbons, for the whole of the issued and to be issued share capital of Mallett.
The Offer will be 60 pence per Mallett Share payable in cash, which values the issued and to be issued share capital of Mallett at approximately GBP8.6 million and represents a premium of approximately:
— 23.7 per cent. to the Closing Price of 48.5 pence per Mallett Share on 26 September 2014 (being the last Business Day prior to the date of this announcement); and
— 11.1 per cent. to the average Closing Price per Mallett Share of approximately 54.0 pence over the three month period ended 26 September 2014 (being the last Business Day prior to the date of this announcement).
Considering that I had included Mallett in The Value Investor Report at a price of 61p I really should have dumped this stock when this news was made public on 29 September 2014 instead of holding on until the shares were delisted at the lower price of 55p:
More importantly that getting out at the slightly lower price of 55p is the fact that capital was tied up unnecessarily in a stock that was going nowhere.
This is a waste of capital which could have been put to better use buying more promising stock.
Moral of the story: dump stock as soon as the announcement of a cash offer is made.