A lot of NT shares to suddenly show up. What happens to the pension & mutual funds holding both bce and NT? Does anyone have a list of any big funds that are going to exceed their limit of NT holdings?
Is this a fundamental supply/demand thing where the in the short term, you can pick up NT really cheap because the funds have to sell? (I expect they have to do this within a certain period, it can't be in their books indefinitely, can it?)
Unlike BCE, NT's expensive compared to earnings, so I don't know if bce holders share the same investment styles of NT holders. In my case, I pay too much attention to P/E and I'll short the NT shares that I'll receive so that I won't have to try to sell them in an oversupplied market later. Of course, I'm probably too late since the funds in question would have sold the NT stocks that they had to by then. (I probably am since NT dropped 6.57% and BCE followed with 5.17%)
Is it a coincidence that 0.78*6.57 is almost 5.17%?
If the price is right, I'll even double or triple my bce holdings, since I suspect bce may have some interesting plans for all the cash they'll get from this.
I also picked up some more of a couple of their possible targets on friday. I sure hope I'm right on at least one of them.
On a last note, bce technically provides an annual dividend of $1.20, and the new NT $0.17. If I take the close of Jan28, this gives me :
Jan28:
NT 130.75
bce 142.25
Technically on friday, ex-nt, bce is trading at C$40.265. A 2.98% yield, which is not too shabby : comes in between TD and BNS. I suspect bce still has some upside, even if we ignore their possible plans. Still a good bargain.
jmho.
you'll get .78 per nt's share value and the immediate efect will be to reduce the value of your bce holdings by the value of the new nt shares you just got.
At a much smaller scale, we could study the SJRB.To issue of CJRB earlier. While the value of sjrb (SJR.B)did go down by the issue price of cjrb, it eventually moved up again.
Alternately, this behaviour is also consistent with a split for expensive stock, and those things do usually move the stock up. Many small investors can't afford to (or won't) buy even 100 shares of a $150 stock. |
