Recently in the Canadian junior market we've had a couple of episodes which have served to remind us that not much has changed in financial markets.
The "failed" WHY (West High Yield) buyout for US$750 million was a particularly entertaining episode. Why on earth "investors" thought that a C$20 million market cap company would suddenly receive an unsolicited buyout offer for US$750 million is beyond me. After all if an entity with that kind of capital wanted to buy a tiny Canadian junior they might begin accumulating shares on the open market, and then might even do a financing and/or JV with the company. And then after all that one could probably offer C$50 million for it and have the entire thing.
However, it seems that hopes of lottery riches are still alive and well among naive investors. On the CEO.ca chat forum the other day I happened to read some chatters being particularly nasty with the WHY CEO Frank Marasco. Blaming him for costing them money and wishing ill upon him. I don't know Mr. Marasco and I actually have no idea if he was involved in this fake buyout offer, but my money would bet he wasn't in on it nor did he profit from it (and I may be very wrong here).
There have been similar fake offers for companies in the past (see World Poker Tour in 2005) and there isn't much a company or the exchange can do to stop them. When the offer says "this is a non-binding agreement contingent upon financing" it's time to run the other way.
For the chatters who are choosing to blame someone else for THEIR poor choice i'd say this, nobody made you buy that stock on that day. You made that decision on your own and you were likely motivated by the potential for huge profits in the event the buyout went through. This is called reward, and in order to generate huge rewards one must often take outsized risk.
This goes for every market choice one makes, not just WHY. Never forget that doing nothing is a choice, and often quite a good one. After all, if you don't have a significant edge why would you participate in the game (the market is a game after all) unless you have an addiction of some sort. Discipline wins the day in markets, it's as simple as that.
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