Finweek English Edition - - Companies & markets -

SOME­TIMES ONE’S faith in the ra­tio­nal­ity of mar­kets is sorely tested. Like when Bar­loworld de­clared a spe­cial div­i­dend the other day.

Now it has been known for months that the latest phase of Bar­loworld’s re­treat from its am­bi­tion to be a di­ver­si­fied in­ter­na­tional player would en­tail a cash dis­tri­bu­tion and the un­bundling of the stake in PPC Ce­ment. That news should al­ready be in the price, and though the ob­ject is to un­lock value, it doesn’t ac­tu­ally cre­ate new value: it’s sim­ply pass­ing over to share­hold­ers as­sets they al­ready own in­di­rectly.

Yet when Bar­loworld de­clared a 500c spe­cial div­i­dend, the share firmed 807c on a day in which the JSE as a whole weak­ened. A small gain might be un­der­stand­able, as in­vestors could wel­come the crys­talli­sa­tion of some of their ex­pected hand­out; but a gain 60% greater than the pay­out is sim­ply ab­surd.

Then, the next trad­ing day, the share fell back 202c against a firmer over­all mar­ket, as san­ity re­turned. And the fol­low­ing day it was again weaker than the mar­ket.

Over a slightly longer pe­riod, Bar­loworld ended Fe­bru­ary at 17 340c, with the over­all JSE in­dex at 25 796; as I write, it’s 17 320c, with the in­dex at 25 209. So it’s held up mod­estly bet­ter than the mar­ket, which may be jus­ti­fi­able; but for a cou­ple of days there were use­ful pick­ings for any traders who took ad­van­tage of the anoma­lous re­ac­tion to the div­i­dend news.

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