Synergy Grid [SGP 11.50 ?4.7%; 125% avgVol] [link], the parent company of National Grid of the Philippines (NGCP), was halted for the first hour of trading to allow traders to consume the news of NGCP’s sale of convertible preferred shares (representing a 20% equity interest) to the Maharlika Investment Corporation (MIC). You can read my write-up on that deal here. Once the one-hour halt was lifted at 10:30 AM, the stock immediately jumped nearly 8% and then was hammered by intense selling pressure. By 11:00 AM, SGP hit its intraday high of P12.06 (up 9.8% over the previous day) on another period of high volume trading, but this price would drop throughout the day to settle at P11.50/share (up 4.7%). On the day, SGP did about P137 million in value traded, which is a little higher than what it did yesterday, but nowhere near the P261 million that changed hands on Thursday last week, or the P461 million that changed hands on January 16.
MB BOTTOM-LINE: I’m happy that MIC found something to do with all the money that it took, and I’m relieved that the investment looks positioned to at least beat inflation. Most of the advice that I’ve seen on SGP has been some form of “sell into strength”, but the thing I have yet to see is anyone who can make a good case for how this investment will benefit SGP shareholders in the long term. I don’t know enough about the company, the industry, how it's regulated, and how all those factors might come together to impact SGP’s profitability. I’ve disliked the SGP structure from the first day I learned about it, and I’ve never felt comfortable with SGP’s place in the oligarch-sphere to be confident in making a long-term bet. For the record, I’m not saying that SGP is incorrectly structured or that the oligarchs that run it are in trouble, I’m just saying that I don’t know enough about it to put money into it by my own standards. I’m hopeful for the country that the government can leverage its bet to bring greater consistency, coverage, and capacity to our transmission grid. At least SGP shareholders are aligned with the government’s PR interest in that regard.
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