Money manager Adrian Day shares his advice to Yamana shareholders on how to handle the Brio spinoff.
Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) has issued rights to shareholders to purchase shares in its Brio unit, which is being spun off. U.S. shareholders, other than “institutional investors,” are not allowed to exercise their rights (thanks, SEC, for protecting us). The rights, however, do trade in Toronto for the next couple of weeks.
We would not exercise the rights in any event. Brio consists mostly of marginal assets and is no bargain. We recommend you sell the rights when you can, for what you can.
Note, however, that this is a two-step process. First a notification of rights is put in your account, then a certificate is issued to the custodian who allocates the rights to clients. Most custodians have not yet completed the second part, so the rights cannot be sold yet, but should be within a few days. It will vary with each custodian.
One right is issued for each 16 Yamana shares held (with no fractional rights). The rights are trading on Toronto (symbol YRI-R) and have been extremely volatile, trading from 33 cents down to 9.5 cents. Thursday, they closed at 22 cents (with a high low today of 28 cents and 16.6 cents). You need to make sure that the proceeds from selling your warrants at least covers your commission (which varies by broker), and, of course, make sure you sell before they expire. Most brokers want instructions by the 16th.
Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing …read more