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AdirondackFund (< 20)




June 05, 2009 – Comments (7)

Instead of acquiring Chinalco, Rio Tinto has decided to offer 15.2 Billion in stock to the Public.

It is such a comfort to know that now everyone is in the Fundraising game.  The US Government, the Banks, now the Miners.  Who else wants to sell some stock?  Where I come from this is called 'leading with your chin'.  It's a supply and demand market and these guys are rushing to the supply side of the ship, causing it to list to one side.  It is probably the side with the hole already blown into it.   

7 Comments – Post Your Own

#1) On June 05, 2009 at 1:02 AM, portefeuille (98.88) wrote:

Instead of acquiring Chinalco, Rio Tinto has decided to offer 15.2 Billion in stock to the Public. 

Instead of acquiring Chinalco? I think you might want to have a look at that article again ...

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#2) On June 05, 2009 at 1:10 AM, goldminingXpert (28.80) wrote:

Chinalco was acquring part of Rio. Instaed, Rio is dumping more of its overpriced shares onto the market. Just as many other companies have done, Rio is using the rally to dump more shares at the top just before the market tanks. Good move. If I were a publically traded company, I'd offer as many new shares as possible--dilute away while you can. I'd IPO too...take the money before it's all gone.

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#3) On June 05, 2009 at 1:17 AM, portefeuille (98.88) wrote:


Today’s deals allow Rio to reduce $38.9 billion in debt without selling stakes in its largest mines to Chinalco, as the state-owned company is known, which investors said favored the Chinese company and drew criticism from Australian politicians. Rio shares jumped to the highest in almost seven months.

“The Chinalco deal was wrong in a strategic sense,” said Prasad Patkar, who helps manage close to $1 billion at Platypus Asset Management in Sydney. “The market was right in marking the management and board down for trying to jam it down shareholders’ throats. But you have to give Rio’s new chairman Jan Du Plessis due credit for listening and pursuing alternatives.”

Rio rose as much as 13 percent in Sydney for their biggest gain since November 2007. They traded at A$73.63 at 12:12 p.m. Sydney time on the Australian stock exchange. BHP rose 9.3 percent, the biggest gain since it abandoned a hostile bid for Rio partly because of concern over its debt levels.


"the market" likes it. so do I. that china deal was "wrong in a strategic sense" indeed ...

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#4) On June 05, 2009 at 1:20 AM, AdirondackFund (< 20) wrote:

Yup.  This is nuts.  More and more shares are flooding on the market.  Am I the only one who sees this wave of human activity?  Or did the aliens cause this from space?  This is nuts.  There isn't the money in the world to absorb all of this supply. 

This is what Jesse Livermore tauted as an 'oversubsciption of shares'.  Jesse was a short seller, mostly. 

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#5) On June 05, 2009 at 2:45 AM, awallejr (28.17) wrote:

It does show how much money there still is out there "waiting" to invest.  $15.2 billion is mind boggling tho.

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#6) On June 05, 2009 at 3:20 AM, checklist34 (98.67) wrote:

for all the impressive amounts of money raised by equity issuance recently...  added all together, do all those billions of dollars represent even 5%, or even 1%, of a days trading?

I don't konw the answer, i'm just curious

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#7) On June 05, 2009 at 11:17 AM, AdirondackFund (< 20) wrote:

Do the math.  When I traded, for 20 years by the way, as a Proprietary Trader for SLK, I would manage a Small Portfolio of between 500,000 to 1 MILL.  Out of that 'capital', I would do about 12 Million a month in Securities transactions. 

What you're seeing in the market itself is leveraged transactions and highly leveraged cash and trading positions.  This is not for the faint of heart, who are, you know, insulted easily.

Put another way,  the 18.2 Billion in offerings leverages up to about 180 Billion in trading capital.  On an inventory turn basis, depending on the trader, it creates approxiately 24 round trips per month or approximately 250 times 180 Billion per year. 

We are having a leverage hodown in the market these days, not unlike the 10:1 ratio prevalent in the '29 crash, that you know, ushered in the Great Depression.  I don't know what is being ushered in here, but it seems as though the White Wolf has grown since 1929 and takes a bite not just from the United States, but from the World.  That's something new that hasn't been experienced yet.  Let's watch.  It'll certainly be exciting and entertaining.    

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