As per the attached document, Santos received a non-binding, indicative takeover proposal for $8.89 per share.
For those of us in the September LTTP, our SOP’s Exit rule says we should close takeover positions 20 trading days after the announcement. Tomorrow will be 30 days since this announcement.
Should we have closed our position or is this indicative proposal different from a firm takeover offer?
Great question and noticing that Tito.
Hi Tito,
STO isn’t part of the September LTTP portfolio. The portfolio was already full when the last signal for STO came up.
The last trades prior to the STO signal were the selling of RRL and the buying of QAN…maintaining full exposure.
STO generated a buy signal at the close of May 28th. The September LTTP portfolio was already fully exposed holding 9 positions at that time.
Having said that, if STO happens to be in your portfolio then you’d need to consult your Investment/Skills Acquisition plan to decide upon the correct course of action.
Apologies, STO is in my non LTTP portfolio. It has been closed immediately as specified in my trading plan when errors are realised.
Great work Tito…The Investment plan will hold many of the answers for what to do in certain situations.
It’s a dynamic resource and should be updated periodically to ensure that it covers as many scenarios as possible.
I’ve got STO in my ASX portfolio. Should I close the position as I don’t fully understand what the problem is?
Thanks David, for the detailed response. I just checked my portfolio and STO was sold a little while ago.
A good refresher
Hi Simon,
Santos (STO) is being considered for a Takeover, and this can represent a potential risk to holders of the stock.
How so?
Takeovers can be very complex and sometimes may even result in trading halts for an unknown period of time, meaning that the shareholder’s capital can not be accessed.
Whilst this is unlikely, it is a scenario that must be considered.
It’s for this reason that the SWS Public Portfolio Investment Plan has a documented course of action for any candidate that it may be holding, that becomes the subject of a takeover.
An Investment plan is a document that all investors should have which clearly outlines the investing objectives, methodology, money management and risks.
It should also provide for a range of different scenarios that could pose potential risks, for example, not being able to access the internet whilst on holidays and having your capital fully exposed to the market. What could one do in this instance?
The answer to this should be documented in your Investment Plan.
What would you do if you became aware that a stock you held became the subject of a takeover, and your funds could be frozen as a result of a lengthy legal process?
The answer to this should be in your Investment Plan.
Ideally, your Investment Plan will cover both scenarios above. There could be other scenarios that you may not have considered, or not even be aware of that will come up at some stage.
The objective is to try and think about what “could” happen and prepare an appropriate response “should” it happen.
For background and further context, you can download the SWS ASX Equal Weighted Stocks Investment Plan here.
