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11/04/18
16:32
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Originally posted by Downanout
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The howls of protest over on the HC AGO board say a lot about retail shareholder’s preference for lottery stocks.
(Lottery type stocks are those perceived to have very small chance of a big payoff.
Unsurprisingly, and in part because of their appeal to irrational investors, lottery stock produce below average returns in aggregate.)
Some AGO holders would rather forgo a 60% profit on what their holdings were worth a week ago and instead hold out for the vague chance of a bigger gain down the track.
They resent that MIN is proposing to take away their lottery ticket, even though MIN is offering value in exchange that is substantially higher than what their ticket was worth a week ago.
Doubtless there are also some AGO holders who paid higher prices for their AGO shares and they are valuing their shares based on their sunk cost.
In 27 half year results, AGO have had positive earnings in only 9 halves, for a one in three strike rate. In 13 full year results AGO has had positive earnings in only 4 years.
Just when is the AGO bonanza supposed to arrive?
Well maybe it has – in the form of the MIN offer.
That may be as good as it ever gets in the AGO lottery.
Cheers
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So Mineral Resources is lottery ticket purchaser??