May 11, 2011

All Out, All Change at RHG

Wow, these are serious volumes being traded in RHG. Almost 142 million shares have changed hands since the company announced a fully franked $0.79 dividend on 28 April.

The efficient market is hard at work transferring the RHG's shares from those on high tax rates who prefer discounted capital gains (such as myself and John Kinghorn) to those who value the franking credits (mostly super funds in pension mode). By the time the ex-date arrives on Friday, half the register will have changed.

I doubt the tax office feels the same, but from my angle it's impressive stuff.

It will be interesting to see where the stock starts trading on Friday - and even more interesting to see whether John Kinghorn buys back in.

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Investing

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Andrew

May 13, 2011

Steve,

As a question - what impact does the 45-day holding rule have on receiving the franking credits?

I guess I am thinking that any of the 142 million shares that are exchanged again in the next 45 days would not have qualified for the franking credits.

What happens to the forfeited franking credits? Would they remain with RHG?

Thanks
Andrew

Steve Johnson - IIF

May 13, 2011

My guess would be that the tax office just pockets them. The company distributes its franking credits to all shareholders, foreign, domestic etc - if the shareholder can't use them it's just tough luck.