TSX:EIT.PR.A - Post by User
Comment by
OptsyEagleon Apr 21, 2009 4:25pm
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Post# 15934228
RE: RE: RE: Rationale For Unit Consolidation?
RE: RE: RE: Rationale For Unit Consolidation?You guys really do not understand closed end funds very well.
When a regular operating company does a reverse split it is usually because business has been bad and their share price has declined. The resulting decline afterwards, is usually just a continuation of the decline that started before the consolidation.
With a closed end fund, its share price trades in relation to its net asset value (NAV). Since the NAV will be tripled in Enervest's case, its share will trade at approximately 3 times as much. End of story. Now, I say approximately, because I cannot account for all the idiots that own this thing, that have absolutely no idea what they are doing, who may create a little temporary selling pressure, because of their ignorance of Enervest's strategy.
The good news is, that a lot of people bought this on margin, using the distributions to pay the interest. At below $3 they were previously forced to sell it whether they liked it or not. Now, this problem has been resolved.