anyone got any ideas about the block trades that went through today?

website: http://www.sterlingenergyplc.com/



weather: www.nhc.noaa.gov/refresh/graphics_at4+shtml/084938.shtml?50wind120

todays SUNDAY TELEGRAPH EDMUND JACKSON.


The right of first refusal in capital raisings is a key aspect of the intrinsic value of shares. Or so it was defined by founders of investment analysis such as Benjamin Graham, who was a key influence on Warren Buffett, the multi-billionaire investor.

Yet nowadays, managers and brokers barely seem to understand what these "pre-emption rights" mean. If a company has a truly exciting investment opportunity, you can bet brokers and institutions will snatch all the equity offered.

It is hard for me to be fair. I admit that in some cases, a board may need to move swiftly and there might simply not be time for a rights issue. Capital may need affirming quickly, and it may be hard to estimate private investor demand for new shares.

Occasionally, after I have criticised in this column preferential treatment meted out to the City in cases where I myself own shares, companies have become more respectful of individuals.

An example of my concern is Aim-quoted Sterling Energy, which raised 97m with institutions - against a market value of 152m at 19p a share - it feels like existing owners are being cut out of the deal. It is commonplace for a discount placing to be arranged, for the benefit of directors as well as the City.

To criticise Sterling is a bit unfair because its opportunity - to take a stake in the Chinguetti oilfield offshore Mauritania - has serious potential. It may have been difficult to agree this conditionally without an indicative commitment of cash.

But as a defender of the interests of private shareholders, I am not altogether sympathetic. Sterling has cited its "close relationship" with the Mauritanian government, with which it is in partnership. Each time a company acts like this, the City knows what it can get away with - and it becomes even harder for private shareholders to have their rights respected.

A few years ago Warren Buffett made a point of raising capital when he had no acquisitions in mind. His rationale? Attractive long-term interest rates were on offer and Buffett's foresight enabled shareholders to be treated as genuine partners. Obviously, the great man was able to do this on his reputation, but all the same it re-affirmed the pre-emption rights that modern finance ignores.

It may be irksome for private shareholders in Sterling to have to pay a premium in the market, but this is small beer compared to the kind of risks they must be prepared to face for putting their money in volatile oil exploration shares.

Of course, soaring oil prices mean the timing is opportune for such ambitious fund-raisings such as Sterling's. The shares are a "buy" - but beware.


On the ADVFN thread EJ has clarified that with regard to the beware bit he was referring to oil prices but this was edited out

Fundy,your bang on with this statement from the telegraph,the real deal cuts out the private investor,fact..
For me its just a case of sitting & sniffing ..

gavdfc,

Re post 1265. Hargreave Hale are probably taking umpteen million shares in the placing at 17p or whatever the price happens to be. It's a no brainer that they're going to say buy at 19p.

Shall I put the coffee on?

Hilary,

Sad but true!

LOL!

Roast chicken today with all the trimmings.. All welcome.

MS

mickeyskint I told you not to mention that I sent you the chicken left overs from 2 weeks ago.

Now then.

Lots of comment concerning us investors being cut out of the new share deal.

Some things I would like to mention.

I am not horrified that the 97 million is being snapped up by Institutions, Banks and the like.

Why not?

Because it surely shows there is every reason to suspect that Sterling is, as most of us already know, going places, and rapidly at that! The Institutions and Banks would not jump in with this amount of confidence if the deal was iffy!

First, some believe that our holdings are being diluted by nearly 50% of what they were last weekend. If that were so, why has the price not halved? There is at least the 97 million deals worth to add to the value of the company so it should not affect the price of our holdings. Yes there may be a 2p deficit to us, representing about 9% of it's current price.

Next, it is said that we should be offered the shares at the premium price.

Well it would be nice, but if the venture is going to raise more than the 97 million gained from the institutions, then why? It is quite clear to me that in the short term the price of this stock is about to rise to the stated 25 to 30p, and in the longer term, say Q1 2006, probably to a much higher level than that.

Lets have a guess at 1 a share.

Yes it is a guess on my part but I now beleive that if things work out, (and who knows if they will?), that is a price as realistic as any other that someone may guess at.

So does 2p on the price of a share really matter to any of us to that extent?

With the existing buy in and royalty deal on Chinguetti, and the ability to do the same with any other finds, noteably Tevet, (which I might add is already at least double the size of Chinguetti), this, barring external influeneces beyond anyones control, is the basis for my optomism.

Add that to the discovery bonus and royalty of approximately $2-$4 per barrel for the PMO portion, then Sterling is really a potential run away winner.

I am no expert at this, but I do manage to see things in what I think is a common sense, simplistic and logical way.

Others may disagree, having tried my recipes.

There is no chance of me selling my stock, this now is one to follow to the end of the road, that being for me either Q1 2006, or the finals for that year, and then I would probably still hold some stock.

By then we will know exactly what is good value and what was a horrible mistake.

This is not a get rich trick for a day trader.

Aim Compaies rarely are.

My belief is that they shuld really be held for 5 years to reap the benefit. I can not do that with all of my holding, so I am pleased that within 18 months to two years I will knwo where I am with SEY.

I suggest 'hold' to the faithful, and 'sell' to the people who can not live with the doubt, uncertainty of risk, and the risk itself.

As mickeysknint has said, there are other ways to make a living, but this way can and is a life experience.

I can no more afford to lose a fortune than the next person, so I am playing only what I can afford to lose on this stock should the pears make a prominent appearance.

On the other hand we stand to greatly increase thre value of our portfolio.

Are you with it or not?

It is up to you.

So DYOR, NOG, TIOLIT,(that's a new one, take it or leave it).

Life itself is the biggest gamble of all!

Evening sw.

Hiho dd.

You are late up tonite!

I dont know about that,should be a make/break week for me ,on sey,with that election over the pond THE DOW,its a tuff call.
Once lost a lot of cash on aim,,manx & overseas ,,bought at 15 1997 i think went down the pan faster than flushed water,,taught me a lesson.
I still want 15 and there`s not much give on that.

Bright & early sw,good night.

gnite

Morning all.

More sells than buys.

Methinks the edit of the Sunday telegraph may have scared a few.

..........Of course, soaring oil prices mean the timing is opportune for such ambitious fund-raisings such as Sterling's. The shares are a "buy" - but beware.


On the ADVFN thread EJ has clarified that with regard to the beware bit he was referring to oil prices but this was edited out.


The power of the papers, can turn a stroy at the stroke of a pen.

Bad luck EJ. Write for a better newspaper in futiure, like the News of the World!

A least you will know they will distrot your story.

I am out today so.............

All quiet on the seawall front!

morning all. i like the mentions over the weekend. sit tight and hold is the way to go. the one point to add about the placement is that with the the stock being placed out to institutions there is a likelhood that less will be flipped out. i know it is an obvious point but relevant to diminish the overhang effect for a while.

Just topped up with 9m shares - in my dreams it was me lol!!!

!!!!!!!

still think you are going to get 15p DD?

well, i would like to get overexcited but it could be a T20 rollover (and added a few to make a round 5 million) but i don't remeber seeing a trade that size over the last few weeks.

Its unlikely ,but i live in hope. I am trying to sell some holding at a fair price at the mo,my be up to 3 lots.

I can get 66000 shares for 10k ,,,,,,,,if they where 15 pence !!

bon chance! i hope for all our sakes you don't get filled