THE BOTTOM LINE
Some shareholders are not exactly in clover over Clover
SENS statement on Friday morning suggesting it might be a takeover target took smaller investors by surprise
Just after 10 on Friday morning Clover issued a Stock Exchange News Service statement advising shareholders that it had entered into negotiations with a third party regarding a potential acquisition. The share price shot up from just over R14 to R16.70 and almost three times the daily average volume was traded.
As the JSE contemplates the submissions it has received in response to the consultation paper it released in September, perhaps one thing it should consider is suspending a share when the company releases a potentially life-altering SENS announcement.
The prospect of a third party acquiring Clover’s entire issued share capital would certainly qualify as a life-altering event for the company.
There was nothing untoward in Friday’s heavy trading in Clover shares. But there may be a few shareholders who weren’t alert enough to notice the SENS announcement and are now feeling a little disappointed they are no longer Clover shareholders.
Many of the sales might even have been prompted by automated processes. Something as short as a 30-minute suspension would be sufficient to ensure no one in the market had an information advantage.
And then there’s the matter of results announcements. In many overseas markets these have to be released an hour or two before the market opens, or after the market closes. However, it is not unusual for JSE-listed companies to release results during trading hours. Particularly problematic are the companies that release the information just seconds after the opening.
Given the massive complexity of a set of interim or preliminary results, the timing of their release can give insiders a substantial advantage over traders who are seeing them for the first time.
Some directors claim they have no control over the timing of the SENS announcements and that they often get clogged up in the system. If accurate, then it’s time the JSE streamlined the SENS system.