Stock Spotlight 8-5-09 - Macquarie Group (MQG)

By Jason Fittler

Macquarie Group produced a creditable result given the current conditions.

Their result was slightly behind guidance but ahead of our forecast, with a dividend at the top end of the guidance range. On the back of their result we have moved our price target up, however we still have a hold on this stock as the current price is above our current price target of $30.57. However, if you already hold this stock read on.

Lets arbitrage this stock and make a little money.

When I wrote this, the price of MQG was $35.30. After a recent successful institutional placement MQG is now offering a share purchase plan to retail investors.

Under this offer, shares held in MQG prior to 30/04/2009 give you an option to buy more shares in MQG at a price of $26.60, a discount of 24%. This gives you the opportunity to sell your existing shares on market now and buy them back through the share purchase plan. Leaving you will the same amount of shares and a bonus of cash. Eg: You sell 200 shares @ $35.30 you receive $7060, you then buy back 200 in the SPP @ $26.60 total cost of $5320. You keep the difference $1740.

If you are interested, make sure you read the prospectus first, and then give us a call if you have any questions. Ph 07 4771 4577