Our customer service team has fielded a few calls about the Sibanye Gold rights offering (SBGL), so let me take this opportunity to simplify it for you in no uncertain terms.
If you already own SBGL, and purchased it on or before April 7th, this rights offering is a great deal that we recommend you take full advantage of because you’re able to buy additional shares at a steep discount. It’s as simple as that! Yesterday was the beginning of the rights exercise period for SBGL.
Here are the details …
* All shareholders of record have the right to buy 9 additional shares of SBGL for every 7 existing shares you already own. That’s a ratio of roughly 1.28-to-1.
* Better yet, by exercising your rights, you have the opportunity to add shares at a sizable 40% discount to the market price.
Here’s what the transaction will look like: We’re currently tracking 150 shares of Sibanye in our E-Wave Trade Portfolio at an entry price of $8.75. So let’s say you own 150 shares of SBGL. By exercising your rights …
* You’ll be able to buy 192 more shares (150 * 1.28 rights) at a price of $3.48 when SBGL is trading today at $5.66 a share …
* That’s an instant DISCOUNT of nearly 40% off the market price …
* So by exercising your rights into common shares, you’ll be averaging down your total ownership cost to about $5.79 per share. That’s dirt cheap!
The first step is to contact your broker and inform them you want to take advantage of the offering. Be sure you have enough cash on hand in your account to exercise your rights into more shares.
Remember, the exercise period ends on Tuesday, June 6, 2017. So please make sure you contact your broker well before the rights offering expires. You don’t want to miss out.
Additionally, we want to make sure you have the appropriate protective sell-stop working on your position at $4.19 good-till-canceled. This should have been adjusted down from the initial level of $6.89 prior to the rights offering.
Obviously, we believe SBGL is undervalued and recommend that you take full advantage of exercising your rights to buy more shares on the cheap. To us, this is a no-brainer!
Your broker should easily be able to walk you through this transaction. If not, I suggest you start looking for a new broker asap. Rights and warrants offerings will be a regular feature of E-Wave Trader going forward, and you’ll want to be sure you’re ready and able to capitalize on these lucrative special situations.
Good investing,
Mike and David
