Ian Norman opened his first store with Gerry Harvey in 1961. The 69-year-old is still a director of Harvey Norman and owns 16.5% of the company or 175.3 million shares worth more than $500 million.
Ian Norman and his wife Shirley also have a large share portfolio which includes 100,000 Alumina shares.
You’d think this couple would recognise a bargain and be all over the current 7-for-10 Alumina entitlement offer at the knock-down price of $1 a share.
Indeed, based on current market practice which allows shareholders to apply for additional shares over and above their entitlement, the Normans would probably have been allocated almost 300,000 new Alumina shares had they applied.
With Alumina shares closing at $1.235 on Friday, such an investment for just seven days would represent an easy $70,000 profit.
Alas, a man who made his money selling value propositions to the public has rejected this bargain basement Alumina offer, highlighting the problem with the great mass of Australian retail shareholders.
The deluge of capital raisings over the past three months have thrown up one of the greatest money making opportunities in years, yet the majority of shareholders are “doing an Ian Norman” and not bothering to participate.
Since the All Ords peaked at 6873 in November 2007, I took a $140,000 hit through until February this year and was left with shrivelled $80,000 portfolio spread across 635 stocks supported by a $30,000 margin loan.
And then it all turned into a golden run with a 100% return or $80,000 profit in three months courtesy of this unprecedented run of capital raisings.
Hundreds of ASX-listed companies have found themselves short of capital due to the GFC and are literally deluging the shareholders of Australia with discounted offers that represent compelling short term value.
The punters are clearly interested because this story for the Fairfax websites revealing the successful tactics generated 255,000 page views last Tuesday.
The full break down of the 15 individual plays that yielded more than $1000 each and another 30 upcoming opportunities are outlined here.
Sadly, Australian retail investors as a whole are missing out on billions of dollars in profits by not taking up their entitlements and also applying for extra shares to soak up any shortfall.
Therefore, if you know any of the 83,000 Alumina shareholders, contact them as soon as you read this and politely suggest they BPAY as much money as they can into the Alumina share offer before it closes at 5pm this afternoon.
The company is asking for a maximum of $285 million from its retail investors, but based on recent practice, they won’t even receive offers worth $200 million despite the easy $60 million paper profit that will be posted if the shares hold steady until the new stock is issued on June 2.
Here are the sad statistics of missed profits for retail investors in recent offers:
Wesfarmers: offered $3 billion worth of shares to retail investors at $13.50 but only raised $1.7 billion and with the stock at $20.81, $1.62 billion in paper profits were left on the table.
Suncorp: offered retail investors $502 million worth of shares at $4.50 but only raised $191 million and with the stock at $6.25, investors left $121 million on the table.
Fairfax Media: offered retail investors $184 million worth of shares at 75c but only raised $123.3 million and with the stock at $1.05 investors left $20.3 million on the table.
Onesteel: offered retail investors $319 million worth of shares at $1.80 but only raised $205 million and with the stock at $2.46 investors left $42 million on the table.
The challenge here is clearly to educate the investing public so please help spread the word ahead of all these upcoming in-the-money entitlement offers from the likes of Alumina, APN News & Media, Billabong, Bluescope Steel and Pacific Brands.
*The author has applied for $40,000 worth of new Alumina shares.