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Smart Group (SIQ) & Whitehaven Coal (WHC)

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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Smart Group (SIQ) & Whitehaven Coal (WHC)

G’Day again, You seem very confident that the SIQ buy out will go through. Why haven’t the arbitrage people stepped in yet??? I would have thought a dollar a share margin would have had them salivating. WHC is making me nervous but I will stick to your opinion. I have a fair percentage in them. Thanks, Waz

Answer

Hi Waz.

An interesting question with plenty of people on both sides of the fence hence the stock trading well below the bid price:

  • We have seen a number of suitors like TPG and other private equity firms walk away from bids and is commonly the case this bid is conditional and non-binding and that is reflected in the discount
  • However the initial bid was strong and the company was granted exclusivity plus its overall a “cleaner” business with few skeletons likely to be lurking in any closets!

MM still believes the bid is successful and hence SIQ is a buy around $9.30.

We have answered your WHC question earlier, however as we have written, it’s important to manage position sizing as stocks rally significantly.

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SmartGroup Corp (SIQ)
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