I recently had an offer that was too good to refuse. I made an immediate 20% gain on QBE shares with no risk and I am not happy about it.
QBE decided that they wanted to raise some more capital and so offered more shares to existing shareholders. At the time the offer was made, the share price on the stockmarket was down so the price QBE was asking $10.70 per share. But by the time we had to accept the offer, the share price on the stockmarket had recovered to over $14.00 per share. The decision was a no brainer. Buy shares for $10.70 each, knowing I could sell them on the market for over $14.00.
So why am I not happy. Well, I have to wonder what on earth they were thinking. Why would management sell off assets that are worth around $14.00 for only $10.70.
Remember, I own shares in that company. I am a part owner. They are my assets they are selling - and they are selling them for 20% less than they are really worth. Yes I made some money in the short term, but this kind of action is going to hurt the value in the longer term. Are management forgetting that they are employed to maximise the shareholder value - not sell it off at a discount.
For all of you with an interest in the sharemarket, you will know that Company reporting season coming up. Annual Reports and meetings always give us a good insight into the management of the companies we own shares in.
