You reap what you sow

English version thanks to Marion Sarah Tuggey
se vuoi leggere l’articolo originale in italiano clicca qui

Even if the “sprint worthy an Oscar” is just few days old, we already need an update. That post was the beginning of our “RCS – the story so far”: the incredible sprint made by its shares and the curious coincidences which surrounded them – well, after some days, where RCS has risen from 0,45€ to almost 3€/share, it is now at 1.29€. Hey, Six Flags Great Adventure, stop bragging about the tallest rollercoaster in the world – we’ve got them in our stock market!

Lots of questions remained open in our last post:

  • Is someone trying to take over a company with a shareholders’ agreement with overwhelming majority (hence, we’d say, armoured?)
  • Is someone trying to take advantage from the reduced free float, in order to boost the share price?
  • And it is like that, why the manoeuvre? To boost the value of the share held by Mediobanca?
  • Or to allow the sale of some shareholders’ share (reluctantly bought some time ago)?
  • Considering future political scenarios, are new power balances going to be created?
  • Could a capital increase make the company contendible?

Some news on the evolution of the story. This is a passage we can read today on Milano Finanza:

The increasingly reduced free float of RCS could lead to the cancellation of the stock by the Italian Stock Market. In fact, since July 25th, day in which the Rcs Mediagroup stock has started its rally, from its minimum at 0.43€, there were trading operations amounting to 9.95%. Virtually the entire free float then, amounting to 11% of the share capital. The market affirms that the powers re-balancing on RCS could be arranged before its natural deadline (March 2014). This is one of the factors which could explain the remarkable amount of trading on this stock, which had peaked 2.99€ before starting its inevitable decline to 1.55€. An odd performance which convinced Luigi Giuliano Martino, Criminal Lawyer in Milan, to take a statement against persons unknown for alleged insider trading. The matter now deals with RCS: is it still suitable to be traded in the market, considering the extremely narrow free float? Given the situation, it is no longer a taboo to consider to cancel trades in RCS stocks. A shocking decision which could be taken by the Italian Stock Market if, as per regulation, it is possible to detect preparatory conditions for cancellation – as a low daily medium market value for the trades along at least one year and a half, the frequency of trading on the same lapse of time and the limited diffusion degree of the financial instruments in the public, in terms of market value and number of owners.

Hence, everyone who’s been following the rise of the stock value and bought the stock is not only subject to a potential loss – but could also be left holding the candle. If Mr. Proto was just pursuing a financial target, as he’d stated, he could have made a wrong choice, again. And when things start getting worse, it is easy to get nervous. And when you get nervous, it is easy to get touchy…we’ve called up an intervention by the Consob, and it has arrived.

In our opinion it is weird to be asked for explanations by the Consob only when we communicate trades in RCS – this is why our attorneys are preparing a statement to be given next week to the Public Prosecutor’s Office in Rome on the activities of the surveillance body.” This is the note issued by Alessandro Proto, CEO of Proto Organization, following the request for clarifications made by the Commission on the purchase of the publishing house shares. “We’ve made several operations on listed companies, even more substantial than these on RCS, which has a very narrow free float – notwithstanding, we’re asked to issue explanations only when the share considered is RCS. We’ll give convenient explanations of our work, as we’ve always done, but we’d also like to know why Consob makes such weird choices. I think we fully deserve to understand the reasons for such a surveillance by the Commission only when the trades deal with some stocks – and not with others. Considering the past – and the current – events, with several disastrous instances (last but not least Fonsai and the Nagel-Ligresti farce, where our investors have already lost a lot of money, we think that a suitable verification of the behaviour held by the Consob could be useful for everyone” concludes Mr. Proto.

Oh, right! Let’s try to control, fence in, enclose this speculative trading Consob – it’s time, isn’t it!? Too many controls, we’re almost out of breath, my goodness! Shame on them! It’s not even possible to get six times the price of an important share, and these inspectors “immediately” arrive, sent by regulator – we’re no longer free in this country.

Bear in mind that the RCS affair includes other cases – among them, Giuseppe Rotelli.

Who’s that man?

Wikipedia tells he’s an Italian entrepreneur of the Health sector. Believe me, this is reductive: he’s the biggest RCS shareholder, with a 16.55% share, out of the shareholders’ agreement, in the Board as representative of the minorities.
He’s the one who bought out the San Raffaele Hospital in May 2012 – a trade worth €400 million – after the death of Don Verzé. May 2012 is the period in which Alessandro Proto has started to rock the boat, talking about RCS in the newspapers. Coincidence after coincidence, Giuseppe Rotelli entered RCS in 2009, exercising some deeds, signed in 2006, when the seller was Banca Popolare di Lodi – which had supported Stefano Ricucci in his attempt to take RCS over – an attempt which has ended as we all know. He bought at the incredible price of 4.51€/share (well over the price then, which was less than 0.6€) being incredibly generous with the institution which had already a hard row to hoe after the scandal between the CEO Fiorani and the Governor of the Banca d’Italia Fazio, contemporaneous (connected?) with Mr. Ricucci and his story.

The reason for this evident scorn for money by Mr. Rotelli in 2009 is still unknown. Maybe it was not so hard to get it. But the judicial truth tells us that maligning is unfair. Or maybe it isn’t.

In any case, it is fair to think that anyone holding a RCS share, which was undoubtedly bought in favour of someone else – given that it was paid seven times its price – should be allowed to take two paths:

Exit this participation, trying to get as less hurt as possible – buying (maybe in April, with low prices) and exploiting sudden rises to become lighter, or

  1. Decide that, holding a relevant share, it is time to try to besiege the shareholders’ agreement, which must be renewed in 2013 and which could be diluted in case of a capital increase
  2. Everything spiced up by the possibility of a cancellation in the trades.

Let’s wait and see the disclosures in the next few days – time will tell how Giuseppe Rotelli has behaved.

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About bimboalieno

Operatore finanziario professionale dal 1998; ha collaborato con diverse banche italiane ed estere. Si può scoprire dell'altro cliccando qui. Oggi é responsabile di un centro di Private Banking. Professional financial trader since 1998; he has worked with several Italian and foreign banks. You can learn more here. Bimboalieno is currently in charge of a Private Banking centre.