NMDC – Buyback Case Study

Part 2

Let us assume today is 4th December, 2020.

The price has crossed the buyback price. The reason we do no know.

Now there aren’t any valid reason left to stay invested in the position. (It could also mean maybe Mr. Market is telling us something which we are missing)

At the current price, It means that all the share get accepted in the tendering process which we know rarely happens. Today, we square our position and book 15 percent capital gain in the mere 20-22 days period.

(You may do something else and we would love to know why)

What happens next……to buyback process

On 14 December 2020, the whole timeline till the date of extinguishment of equity shares have been intimated by company through letter of offer.

On 9 January 2021, through post buyback public announcement , we come to know about the tendering status , under the small shareholder nobody tenders and under general shareholder category only promoters tender.

Conclusion: Only price increase works in our favour, the model we use while making the decision like acceptance ratio and post buyback price can’t be tested in this situation.

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