Reckon Ltd T.RKN

RKN drop due to x-date re rights offering

[a1broker1]

Unfortunately, some investors do not do their homework or do not understand the rights offering concept.   Eligibility to receive one right per share has a record date of August 1st.  That means the last day to own shares of RKN and also receive the rights was Thursday July 27th.  Many large institutional shareholders wanted these rights due to the discounted price of the shares to be purchased with the rights.  That is why many days there was huge volume as well as a significant run up in the stock price. 

On Friday July 28th, the shares went x with respect to being awarded rights.  This is very similar to a stock going x-dividend, in effect RKN went x-rights.  That is the sole reason for the major drop in price on Friday, and was actually to be expected by those who have done their homework.  Shareholders of record on Aug 1st (shareholders whose shares were purchased by July 27th) will soon see the rights appear in their accounts.  The rights will trade on the TSX as RKN.RT.  As I have written several times before, the smart money will exercise the rights at $0.63 CDN to avoid dilution by ESW.  Again, remember the reason there has been many huge volume days and price appreciation prior to July 28th was strictly to acquire and exercise these rights.  Obviously, there was huge institutional demand for these rights, which is a very positive signal for the ultimate future of the "new" RKN.

I hope this brief summary helps investors understand the trading pattern of RKN over the last month or so.