<<personally don't buy the Cayman argument. This news was known for quite a while and it was supposedly done to improve the bottom line. So why would we see such unrelenting selling over the last month or so.>>
It wouldn't matter if the move improves the bottom line -- if a fund's by-laws prohibit it from owning foreign corporations, or corporations in certain tax haven jurisdictions, then those funds have to liquidate. Since I don't know which funds own RIG and what those funds' by-laws require, this is just a theory, but I have seen enough fund prospectuses to know this would not be an unusual provision.
Even if it was known some time ago, funds probably waited until the last minute to sell because RIG was moving nicely with the group, and they wanted to milk that move for all it was worth. And, after a huge washout, it's not unusual to see a few failed dead cat bounces, which would account for the selling in the last week or so -- but note that the selling last week was on lower volume. Moreover, the entire sector has seen selling for the last month (look at a chart of FLC, for example), though not to the same extent.
RIG has not been my favorite this year, given the fundamentals of those semis coming off contract, but I think it is now one of the better bang-for-the-buck stocks in the sector, and perhaps THE bang-for-the-buck component of the OSX at these levels. |
