Question 1: Can you explain why Magellan (MFG) is issuing bonus options? What do the options entail?
Answer: It is difficult to find any “real” reason why Magellan (MFG) is issuing options. It does make the company harder (and more expensive) to take over. Also, it could be argued that the terms are consistent with an issue of employee options.
The options are being issued on a 1 for 8 basis (i.e. if you have 400 Magellan shares, get free 50 options). Each option allows you to subscribe for one new Magellan (MFG) share at $35.00 per share. The options can be exercised at any time up to 16/4/27 (ie have a 5-year term).
The options are separately quoted on the ASX under the code MFGO. Today, they closed at $1.46 – so potentially, one “option” is to sell your options on the ASX.
Question 2: In relation to Megaport (MP1), which recently provided a weaker-than-expected quarterly update, I note that Bevan Slattery reduced his holding of MP1 by 1.93% from 7.04% to 5.11% on 18th March. However, between 18th March to 22nd April, six other major shareholders have increased their holdings by 10.97%. Given the support from these major shareholders, do you think that the earnings potential of MP1 is more delayed rather than reduced and the share market reaction to the results was overdone?
Answer: For every buyer, there is a seller, so while it is interesting to consider the “quality” of the buyers, I am not sure I would read too much into it. Institutions also get it horribly wrong.
I think that at the moment, tech is so much “on the nose” that the sellers are in full control.
Question 3: What do you mean by “to take a profit”? Does it mean if you (say) purchased shares for $25,000, you sell enough shares to recover your initial outlay of $25,000 and then hang onto the remaining shares?
Answer: There is only one definition of “taking a profit”. Selling some, or all of your shares, at a price higher than you paid for them.
One strategy might be to sell enough of your shares to cover your total purchase cost, and hold onto the remainder and let them “run”. Experience says that “letting your profits run” can be a very sound strategy – we all make the mistake of taking a profit too early.
Question 4: What is the last date to buy ANZ shares to get the dividend of 72c? What is the last day for NAB’s 73c interim dividend?
Answer: ANZ goes ‘ex-dividend’ on Monday 9 May, so you need to buy before COB on Friday (6 May).
NAB goes ‘ex-dividend’ on 11 May, so you will need to buy them before COB on Tuesday 10 May.
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