Around a half dozen readers have asked about LNC. LNC has just gained shareholder approval to switch its listing from the Australian Securities Exchange to the Singapore Exchange. Before reading on, please note the following: a) LNC will cease trading on the ASX at close of business 15 November and b) I have not done any homework on this stock or spoken to anyone at the company - I am just offering a few random thoughts for what it's worth.
The following is an excerpt from the company:
The logic appears to be that LNC will be more appreciated by listing in Singapore. One immediate flaw in this strategy comes to mind: buying shares anywhere in the world is pretty easy these days. Just open an account with CMC, IG, Saxo, Interactive Brokers, not to mention the various institutional platforms. Money searches the world for value, so if LNC is truly under appreciated here in Australia, it ought only be a matter of time until investors wake up. But this could truly be a naive view and I have no facts at hand to rebut their argument.
One reader points out that a company called Cordlife did very well after going through the same process. I have not looked into this company.
If LNC is genuinely under appreciated in Australia, it would suggest buying LNC while it is still listed on the ASX offers an arbitrage opportunity. My problem with this idea is that even if it is true, miners are incredibly volatile: good arbitrage profits can easily get wiped out when commodity prices go south. FMS, DML, GCL come to mind in this regard. For my money, I would need to see a huge margin of safety before taking on this trade.
Finally, in terms of what LNC actually does, a succinct write-up has been produced by Intelligent Investor: you can read their write-up here.
I hope this is of some assistance.
Kristian
Disclosure: no position in LNC
Please get in touch! I am always on the lookout for interesting stock ideas, with a particular emphasis on deep-value, growth companies run by outstanding management and arbitrage opportunities.
Hi Kristian,
ReplyDeleteAfter reading your post, I googled about LNC and looked at their past performance, in 2008, this share touched its highest point at 5.19 AUD but since then it is ranging from 1.20 - 2.85 which doesn't look good for a company like LNC. Are they really under appreciated in ASX?
Regards,
John Hussey
http://www.capitalvia.com/au/
KD, all good points, and well put. The effect of switching exchanges can easily be overstated. However- check out today's action in the closing match. LNC matched a long way down from where it had traded all thru the day. So clearly a move has at least some effect. W
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