What is backdoor-listing?
A typical backdoor listing happens when a private company acquires or merges with a listed company that is dormant or not actively-traded. This also makes the private company can be listed in the stock market without going through an IPO or an Initial Public Offering. Usually, when the news has already been circulating, the stock becomes highly-traded and is now the talk of the town. Media, new disclosures, personal analysis,hyping, bashing, and different theories will add to the frenzy. Siguro, chismoso lang talaga ang mga Pinoy at nag-aantay ng bagong pag uusapan hehe
Common back-door listing in recent years:
*Lucio Co’s COSCO listed through Alcorn Gold Resources Corp. (APM) in 2010.
*Enrique Razon’s BLOOM listed through Active Alliance, Inc. (AAI) in 2011.
*Lucio Tan’s holding company LTG listed through Tanduay Holdings, Inc. (THI) in 2012.
*Dennis Uy’s PHR listed through Philippine H20 Ventures Corp. (H20) in 2018.
So why this is important Kapayaman?
In PH Market, bulong-bulong and chismis are very common and you can avoid being hyped or pwede ka ding kumita kung tama ang timing mo at gamitan mo ng TA. But, basahin mo muna eto kasi eto kadalasan ang mga nangyayari sa mga backdoor-listing;
Phase 1: The RUMOR.
It starts out through chismis about a stock that is going to be used as the vehicle for a backdoor listing. Sa stage na eto, the stock price usually shoots up, doubling or tripling in over a matter of days.
Buying the stock at this stage is like driving a car blindfolded. Sadly, many people fall into the trap of trying to make a quick money, only to get burned badly.
My advice Kapayaman: Stay out at this phase!
Phase 2: The REALITY CHECK.
It signals the change in ownership and nature of the business of the new company. As you can see in the chart, the stock is all over the place as the market tries to digest what’s going on.
Phase 3: COMPANY RENAME.
The new company now discloses details of its business plans in PSE Edge. After the transaction is completed, the stock begins to seek its fair value as investors start focusing on the business prospects of the company.
May mga kumita ba along the way?
Except for a few lucky ones (di kailangang matalino) who made money trading the stock early on. Most who bought at high prices ay LUGI.
Kapayaman, Do you want to learn more about Stock Market investing and trading? You can access our digital courses: