BJFoods-Selling Down by Weakholders

Food for Thought  

In spite of a call to hold to your horses by AmResearch, some 352 lots got sold at low prices of RM1.22 knocking off 4 sen.

Looks like this seasonal stock needs to gather traction sometime.

I would not look to tomorrow as Friday is always Seller's Day.

Let us watch for a price resistance before commenting further.

Meanwhile, in the next posting, I will review the best bits of the AmResearch paper.

I have just noted that the conversion of each BJFoods warrants comes with a tag of 70 sen. That would mean that one free warrant plus 70 sen will beget you one sweet baby of a  BJFood share.

At today's price of RM1.23, that would work out to a haircut percentage of  56%. Yet another bonanza, don't you think so?

Let us create a simulated situation when one buys  1000  shares of BJFoods.

You will have to pay (exclude charges) RM1,230.

When it goes ex-rights, the price should not go own at all.

If it lekat as they say in Bahasa Malaysia, then the new rights of 800 shares(800 shares for each 1000 shares held cum rights) should trade at current value. This will put you ahead with a gross profit gain of  RM1.23 x 800 =RM984.00. Minusing the rights price of  RM520.00, the net gain to you will be RM464.00. That would mean a return of (464 divided by 520)=89% in a short window from cum to rights.

So, given today's price of RM1.23, this will amount to about 37.7% return.

Each warrant is convertible at 70 sen. A fair discounted conversion price should prove attractive to speculators and short term holders. Expect any price. Even at 10% of conversion price, it will bring you profits of 12 sen per lot of 1000 at current price or RM120.00. So, at 800 warrants, you stand to gain RM96.00 for your warrants.

Let us see whether it will pan out well.