OK, so noobie me used WealthSimple to gamble a few dollars to learn about how the stock market works.
So I bought 36 shares @ .28 cents apiece of some shitty little gold mining company called Argonaut.
Their value shot up to 39 cents yesterday because of news it's being eaten by a slightly bigger fish called Alamos.
Can someone ELI5 what this means?
News release, with stock stuff in it:
I get the sense that I'm about to be winning, but I'm not sure what to do.
If you hold on to the stock until the deal closes, you get 0.185 shares of the acquiring company Alamo for every one of your shares, so 36x0.185=0.666 shares of the new stock. In addition they are spinning off the mines owned in the US and Mexico to a new company, and you get 1 share per of that new company so, 36 shares.
Total value is supposed to be around 40 cents, so, as a result of this deal you should be about 12 cents per share better off. Meaning your 10 bucks should be worth about 14 now.
Yes, it closed at $14.22 yesterday.
The Alamos shares are worth a little over $19 as of yesterday closing.
Should I sell? Or hold on to them?
I probably would sell it just to not have to mess with. Maybe if I had more shares I'd think of it differently. If I wanted to keep the new company just get the $14 and go buy one share of Alamos.
Oh and to add, something I didn't think of but I've had happen. You may just be paid cash at the deal close for the 0.666 shares of Alamos, which at the moment would be about 9.69 cents, but depends on the value of Alamos at the time. I believe that's due to a broker policy, since you will have < 1 share of the Alamos stock.