RAB Special Situations Company Share Discussion Threads

[exmooroil] 17/3/2006 13:19

Schedule 1 notice today:
Finders Resources (Cu mining) due to IPO 22.3.06. RAB (does not specify which fund) holds 8.2% after admission. Sounds like "Special Sits".
52.8m shares to be admitted @ 20p, according to the notice.

[exmooroil] 16/3/2006 06:38

Thanks, rambutan2

[rambutan2] 16/3/2006 02:22

re exercise of wrrs queries.

as is normal practice, the company will give notice of subscription and a holder can then cough up the cash and exercise their warrants. OR, wait, and within 7 days of the expiry of the subscription period the company will appoint a trustee who, provided it is economic ie the wrrs are at least a few pence in the money, will exercise the rights, sell the shares in the mkt and distribute the net proceeds pro rata. in other words, he'll do all the work for you and within a few weeks you'll receive a cheque in the post.

HOWEVER, as far as i can see, under the accelerated call feature, there is no trustee appointed.

[rambutan2] 16/3/2006 01:02

exmooroil - 13 Mar'06 - 16:02 - 296 of 300

Does anybody have an answer to the following:

Does RSS hedge the $/£ exposure?

the answer is yes. fully. (i checked the placing doc)

[rambutan2] 15/3/2006 12:36

cheers dunnie. closing makes sense and is nothing out of the norm for such a hedge fund. i like the mention of the warrants port. onwards and upwards...

[dunnie] 15/3/2006 12:28

Attachment : SpecSitsFundStatisticalupdateFEBESTS.pdf (0.13 MB), SpecSitsFundDEC05(QUARTERLY).pdf (0.14 MB)

RAB Special Situations Fund - Important Message from Michael
Alen-Buckley
I have already written to shareholders in the RAB Special Situations
Fund to say that mainly because of the strong price performance of the
fund, assets have grown and are now over $900m.
Philip and I have decided that we would like to close the fund to new
investment at the end of April (1st May)
The fund retains a very flexible investment mandate and currently has
the majority of its exposure in four areas: precious metals, base
metals, energy and a portfolio of pre-IPO investments. In addition, the
fund benefits from a large warrant portfolio from previous financings
which provides extra upside in positive markets for our stocks. Philip
and I are optimistic that the value inherent within our portfolio will
be realised as time passes and projects are built out. The upside
potential remains compelling to us, driven by the industrialisation of
Asia, Latin America and the Gulf.
Our most recent Quarterly Newsletter and monthly update is attached for
your convenience

[exmooroil] 14/3/2006 15:25

energyi,

The RSS price/NAV table at the intro to the thread has an incorrect figure:

The undiluted NAV/share for 10.3.06 is not 141.25p. RAB's website shows it as 146.92p. Can you alter the table please.

Where did you get that "estimate" from?

Regards.

[fatfin] 13/3/2006 19:13

Sold my warrants today.

[exmooroil] 13/3/2006 16:02

Does anybody have an answer to the following:

Does RSS hedge the $/£ exposure?

Special Situations Fund NAV/share is quoted in US$, but RSS NAV/share is quoted in sterling, thus adding another factor to consider.

When RSS floated on 31.5.05, the $/£ rate was approx $1.82 compared with $1.73 last weekend. The dollar is 5% stronger now than at IPO, and I am assuming that the benefit has accrued in the overall NAV of RSS.

How might the exchange rate affect RSS NAV between now and 31.5.06 and 31.5.07?

I don't know.

[fatfin] 13/3/2006 10:07

Speaking to someone from RSS re the RSSA warrants.... If you do not buy the shares by the end of May then the paper is worthless and you will not get the difference between the new shares being issued and the present share price. Sell the warrants or buy the shares by the end of may or kiss goodbye to your money seems to be the message. Best speak to your own broker over this.DYOR

Fatfin

[dunnie] 12/3/2006 18:16

Exmooroil/rambutan,
the problem with such a volatile fund like the SSF is you can be "in the money" and "out the money" in the same day/week, if they are going to issue the "diluted" and "undiluted figures" fine, but they should do this every time they announce the nav,instead they publish the weekly undiluted and the monthly diluted even by the B's which may not come into play for over a year,and although the nav is over the 1.30p mark the share price is lagging.
Let me say i am a massive fan of the fund but some newcomers should be aware that the warrants are a "real punt" because of the time frame involved and the tendency for the sector to be hit by corrections,in fact i recently sold my A's at what i believed was a fantastic profit, but believe i will be able to pick up the B's for sub 10p in the summer months,that is my honest belief.
Regards

[trader horne] 12/3/2006 15:53

rambo, I meant the Atlantic! - best ask your broker about exchanging warrants for shares.

[exmooroil] 12/3/2006 15:52

Thanks, rambutan2. Spot on. The purpose of this, and any other, thread is surely to identify the facts, so that informed investment decisions can be made.

Regards, Ex

[rambutan2] 12/3/2006 12:57

you are correct exmooroil. imho i dont think that rab should be issuing any navs which doesn't show the diluted, and if they like, the undiluted nav. but the diluted is the true nav for as long as the shareprice is over the exercise price(s) ie 115p and 130p.

[exmooroil] 12/3/2006 12:24

dunnIE,

The cash received does not effectively cancel out any dilution effect, that is the whole point.

I consider the Manager is acting entirely responsibly in quoting the fully diluted NAV once the warrants were "in the money".
This must be the conventional FSA requirement for reporting, however the reason for the large impact on the NAV of RSS is the doubling of the share capital of RSS from 40m to 80m by 31.5.07, assuming the 20m A and 20m B warrants are exercised. That is why the effect is so significant.

That is the way RSS was set up, and I believe RSS was originally marketed as a vehicle for "institutions" to gain exposure to the Special Situations Fund.
Those institutions are more likely to convert their warrants than private investors, in my view. Please correct me if I am wrong.

Regards.

[dunnie] 12/3/2006 11:57

Exmooroil.i believe it is a dangerous calculation for the mangagers to give a diluted figure until the warrants are excercised,it almost like "counting your chickens" before they "hatch" especially when the cash received effectively cancels out any dilution effect,certainly the B's should not be be considered just yet as i doubt whether the managers would even consider wanting to excercise them in case of a "correction",although the prize money of 49m would be good to invest in the summer months when it tends to be cheaper to invest in resource stocks.
On another note RSS float Amur Minerial Corporation this week,and the very astute Philip Richards,CEO & Fund Manager,has taken a personal stake.
Regards

[exmooroil] 11/3/2006 16:15

dunnIE,

In answer to your question:

"does your diluted figure allow for the (£)23m they receive should the A's be exercised" :

The answer is yes, as you can see from the formula shown below (please check this with the Manager, but mathematically it agrees every time with published figures):

[(40,000,000 x £undiluted NAV/share)+ (20,000,000 x £1.15) + (20,000,000 x £1.30)]divided by 80,000,000.

The formula automatically adds the proceeds of £23m (A) and £26m (B) to the NAV of the "existing pot".

Regards

[dunnie] 11/3/2006 14:03

Exmooroil,the managers quote the weekly nav undiluted,but the monthly nav shows both figures,does your diluted figure allow for the 23m they receive should the A's be excercised and another 26m the year after.I would not be to sure about the "unlikely correction" as historically the Fund gets hit around the April/May time but last year got hit early around the March/April time,although the fund manager/CEO has already stated he is "prudently taking profits" this year to avoid a repeat of last year when the fund was up over 25% before giving back the gains in summer months.My view is there is much more liquidity in the junior resource sector this year with a lot of the major miners and big fund managers looking to invest in the junior sector.
Regards

[exmooroil] 11/3/2006 12:15

Thanks, dunnIE. The table I put on the thread on 16 Feb (247) only confirms the fully diluted NAVs the Manager began to quote in February- all hypothetical in the event, however unlikely, of a major correction. The table does not go above 150p undiluted NAV, although it is perfectly possible that the undiluted NAV could exceed 150p for 20 consecutive days. What chance do you think the company would force conversion?

It is important to know where you stand in order to make informed decisions, and clearly the RSS share price, upon which the warrant prices hinge, tracks the fully diluted NAV.

Regards

[dunnie] 11/3/2006 09:41

exmooroil,
you have to be careful when quoting the diluted nav as that will only happen if it is worth converting the warrants to shares,any major correction would certainly see the A'warrants worthless,if they do keep the warrants in the money then the company receives $40 odd million to invest in early June, and obviously the same next year,there is also a "accelerated call feature" in the warrants, whereby if RSS shares trade above 1.50p(A's) & 1.70p(B's) for twenty consecutive days the company "at their choice" can force holders to convert.
Regards

[exmooroil] 10/3/2006 20:22

Unlikely that there has been an overall recovery just today, since the top 5 have remained at par, but worth remembering that a drop of 3p in undiluted NAV is a drop of only 1.5p in fully diluted NAV -refer to table earlier. IMO.

[dunnie] 10/3/2006 18:00

NAV Falls a mere 2%,
which is fantastic seeing the resource sector has been down for the last 10 day's,in fact it may even have recovered the 2% today.

[rambutan2] 09/3/2006 23:40

trader, they dont do cashless hold on this side of the water - are we talking thames, channel, atlantic or?

[trader horne] 09/3/2006 20:55

My pleasure. The expiry day is (I think) May 31.
Another option (at least on the other side of the water) is "cashless hold":-
If you have £x of warrants, you end up holding £x of shares.

[fatfin] 09/3/2006 14:06

Trader Horne. In your post 276 it says it will send the cash proceeds to the shareholders. In fact this is the ex warrant holders now shareholders and you then get the difference sent to you. That is assuming you do not want to buy the shares at 116p yourself. Now the water becomes clearer. Many thanks.