Digi and the Small Time Investor

Investment grade

In life, no pain, no gain. That is one saying for risk taking.

Then in love-there is faint heart don't win fair lady.

How about one from the obverse? Fools rush in where angels fear to thread?

Whatever it is, there will always be risk takers, punters and investors.

Some are there for the action, others for the thrill;some for short term gains and others for the long term haul.

Every trading day, deals are done with some cashing in the money, some losing and the remisiers and investment banks taking their fair share from both buyers and sellers.

So, did you pun in on Digi after the announcment of  the share split or after it split?

Let us assume a small investor buys a 100 shares of Digi at RM31.60, way after the the announcement and after weak sellers have dunked Digi for easy cash. The lowest it went was to RM31.00 and on good market days it rose from RM32 right up to RM34.96.

It then went ex on 21 September, topping at RM3.88 and after a period of indigestability brought about by a huge deluge of shares, settled from RM3.48 to RM3.60. It is now at RM3.73.

Let us calculate what is the reward for risk taking on a blue-chip counter like Digi which is 49% held steadfastly by Telenor of Norway, ever ready to buy some more when Bank Negara indicates the date line for more substantive holding for foreigners soon.

For a quick count, a minority shareholder will pay RM3,160 for the purchase. This will work out to RM3.16 on an ex basis.

Given the last traded price of RM3.73, the buyer would have gained RM570.00 gross. This will amount to a 18 % gain for a short period of 10 weeks.