Morning Report Friday 31 October 2014
Where will the unlucky billions of dollars of Medibank money go?
Brokers are eagerly awaiting their Medibank allocations today, with most hoping for a 75% scale back, but bracing themselves for up to 90%. In simple English, that means if a client bid for $100k, he may easily only end up with $10k worth of shares which are likely to be at the top end of the $1.55-$2 price band. After yesterday’s media release by the government it feels like brokers and investors will be disappointed.
Medibank Private Broker Firm Offer exceeds expectations $12 billion in bids received - $1.5 billion allocated.
Having been in the market for about 25 years, I believe that the minute brokers know how much they have been allocated, the phones will be humming as clients are advised of other stocks to put money into. The number one candidate is NIB Holdings (NHF), which has a very comparable business model and although it has already bounced hard in recent weeks, up 17.8% against the markets 6.9%, I remain short term bullish.
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