LRD (Laird) is a company that I have disparaging rather uniformly. I had sold out in Oct 2016 a 159p, having bought in Jan 2016 at 354p. BUT, I think emergency rights issues make interesting material for investigating special situations.
Companies land themselves in hot water, and are often forced to have a rights issue at precisely the wrong time in the cycle. We saw that happen with at least one builder a few years ago, for example.
But the theory is, that provided the business is reasonably viable, these types of rights issues are actually buy signals. That was certainly the case with builders. It did not work out well with PFD (Premier Food), however. Perhaps this type of investing is more suitable for investing in cyclical companies, though. I’m not sure how investors in LMI would have fared. I will need to investigate that a little further.
On 4 Apr 2017, the New Shares were issued to the market. The shares closed at 147p. The shares declined steadily thereafter, reaching a low of ~138p on 26 Apr.
LRD issued a trading update on Fri 28 Apr, sending the share price up 6.2% to 150p at the close. So the market clearly liked the results.
So let’s see if LRD can beat the market over one year, assuming a purchase price of 150p.
150p. ASX 3962