Wednesday, 7 February 2007

Compulsory Share Aquisition

The takeover of Mayne Pharma by Hospira was finalised last week and a cheque for $11,389.80 arrived in the post yesterday. I don't mind the price ($4.10 per share) as I made a decent profit on this stock, but compulsory takeovers are always a bit of a pain as they don't necessarily fit in with your ideal schedule for realising capital gains.

Anyhow, it could be a lot worse - a few years ago (before the commodity boom and oil price increases) I had a long-term view that commodities in general, and oil in particular, would go up in price over the medium to long term. To get maximum benefit for such a price rise I decided to buy some shares in an oil-share company (Southern Pacific Petroleum) that had a working test-scale oil shale plant in Queensland, and mining rights to a massive oil shale deposit. Unfortunately there were a few problems with the test plant (smelly emissions annoying the nearest townsfolk), and they ran out of money while trying to develop the pilot-plant stage of the project. The very low prices for oil at the time also didn't help. I'm still annoyed that they didn't try to raise further capital from the existing shareholders. Instead they simply sold off the entire company to a US investor who assumed their liabilities. The existing shareholders ended up with no return and no interest in the oil shale deposits. Now of course the company would be worth a fortune.

One lesson from that debacle is to not try to be too "smart" (aka. greedy) - rather than investing in a small, speculative oil-related mining company, I should have just invested the money in an established oil company, such as Woodside, or an oil refiner, such as Caltex Australia.

yet another case of "what might have been" - just like the time I invested in a pre-IPO internet company (called Global Entrepreneurs Network "GEN") in the late 90s, rather than in Amazon.com

1 comment:

Empty Spaces Inc. said...

yeah, you could've bought exxon and done pretty well.

i bought some PTR thats done pretty well.