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Healthscope is re-emerging on the ASX after being under the tender loving care of private equity since 2010. As a result, HLNG/HLNGA will today (COB, Thursday 10 July) cease trading from the ASX. Note holders will have the option to redeem for cash or convert to ordinary shares. Being a previous holder of the notes, I feel somewhat familiar with the background and so spent some time considering whether to buy the notes to convert into shares or just apply for shares in the IPO.
I recently re-bought HLNG with the idea of looking for a stag profit, however on further thought I reversed that view and decided against the trade and sold them - at a very small loss. Every broker seems to be touting the reasons to apply for stock in the IPO. The rationale seems pretty reasonable: a) healthcare provider (great business, and not many listed in Australia) b) lots of stock in escrow c) lots of stock given preference to HLNG/HLNGA to convert d) cheaper than Ramsay Healthcare (RHC) and e) index funds will need to buy the stock. All this adds up to the idea the stock is in short supply relative to demand.
On reflection, these are all market based reasons for the trade. I'm not good at trying to out guess what other people in the market are doing: I want to find the $1 for 50c trades. The fundamentals are not cheap in an absolute sense, and that is after trying to be generous with future projections. The other concerning factor is who exactly is the patsy in the trade? One of the hot topics of recent years has been the danger in buying from private equity. And yet here we are with people apparently clambering over themselves to buy a stock with a PE of 20-23 because it is cheaper than RHC.
It would be irresponsible of me (not to mention illegal) to suggest Healthscope would be a good/bad stag potential. There are far better market animals than me, especially in large caps. Just look at RHC: I've watched that triple in price and I missed it the whole way! For my own portfolio and learning, I am sticking to my own style of investing and therefore leaving this one alone. Not fundamentally cheap. Buying from really smart guys. Not enough (perceived) upside at least in the short-medium term. No particular analytical edge or insight.
KristianHealthscope is re-emerging on the ASX after being under the tender loving care of private equity since 2010. As a result, HLNG/HLNGA will today (COB, Thursday 10 July) cease trading from the ASX. Note holders will have the option to redeem for cash or convert to ordinary shares. Being a previous holder of the notes, I feel somewhat familiar with the background and so spent some time considering whether to buy the notes to convert into shares or just apply for shares in the IPO.
I recently re-bought HLNG with the idea of looking for a stag profit, however on further thought I reversed that view and decided against the trade and sold them - at a very small loss. Every broker seems to be touting the reasons to apply for stock in the IPO. The rationale seems pretty reasonable: a) healthcare provider (great business, and not many listed in Australia) b) lots of stock in escrow c) lots of stock given preference to HLNG/HLNGA to convert d) cheaper than Ramsay Healthcare (RHC) and e) index funds will need to buy the stock. All this adds up to the idea the stock is in short supply relative to demand.
On reflection, these are all market based reasons for the trade. I'm not good at trying to out guess what other people in the market are doing: I want to find the $1 for 50c trades. The fundamentals are not cheap in an absolute sense, and that is after trying to be generous with future projections. The other concerning factor is who exactly is the patsy in the trade? One of the hot topics of recent years has been the danger in buying from private equity. And yet here we are with people apparently clambering over themselves to buy a stock with a PE of 20-23 because it is cheaper than RHC.
It would be irresponsible of me (not to mention illegal) to suggest Healthscope would be a good/bad stag potential. There are far better market animals than me, especially in large caps. Just look at RHC: I've watched that triple in price and I missed it the whole way! For my own portfolio and learning, I am sticking to my own style of investing and therefore leaving this one alone. Not fundamentally cheap. Buying from really smart guys. Not enough (perceived) upside at least in the short-medium term. No particular analytical edge or insight.
Disclosure: no position in the above names
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