Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The <a href="https://www.smartkarma.com/entities/rolls-royce-holdings-plc" target="_blank" data-smartkarma-citation="entities:22121:1" rel="noopener">Rolls-Royce Holdings (RR/ LN)</a> Rights Offering announced on 1 October has confounded me. I thought that a situation where shares were trading at GBp130 and offering 10 rights for every three shares held to be exercised at GBp32 each, meaning that investors who owned shares had to decide to reinvest 82% of their existing exposure just to buy the new shares and NOT get diluted would mean that long-only holders would sell. Instead, after seeing shares drop 20% in two days, they promptly rallied 100% in the next five days and have basically settled at just below 80% up from where they were at announcement. Today, Rolls Royce holders <a href="https://www.reuters.com/article/us-health-coronavirus-rolls-royce-hldg/rolls-royce-shareholders-approve-two-billion-pound-rights-issue-idUSKBN27C1KX" target="_blank" rel="noopener">approved</a> the Rights Issue at the shareholder meeting today ("overwhelmingly" according to Chairman Ian Davis). Formal results will be published later.The Rights go ex- tomorrow.  The change in share price changes the exposure for long/short funds who happen to have shorted it here. That is the nature of rights offerings. With the rights exercise price so far below where the real-time TERP (Theoretical Ex-Rights Price) stands, it would seem shareholders have become significantly more bullish.

The Rolls-Royce Holdings (RR/ LN) Rights Offering announced on 1 October has confounded me. I thought that a situation where shares were trading at GBp130 and offering 10 rights for every three shares held to be exercised at GBp32 each, meaning that investors who owned shares had to decide to reinvest 82% of their existing exposure just to buy the new shares and NOT get diluted would mean that long-only holders would sell. Instead, after seeing shares drop 20% in two days, they promptly rallied 100% in the next five days and have basically settled at just below 80% up from where they were at announcement. Today, Rolls Royce holders approved the Rights Issue at the shareholder meeting today ("overwhelmingly" according to Chairman Ian Davis). Formal results will be published later.The Rights go ex- tomorrow.  The change in share price changes the exposure for long/short funds who happen to have shorted it here. That is the nature of rights offerings. With the rights exercise price so far below where the real-time TERP (Theoretical Ex-Rights Price) stands, it would seem shareholders have become significantly more bullish. 

International Consolidated Airlines Group (IAG LN)

International Consolidated Airlines Group

Rolls-Royce Holdings

Rolls Royce Rights Roll Off