Possibly smart or possibly caught long in a falling stock, and...

Possibly smart or possibly caught long in a falling stock, and now trying to prop up the price after the retail portion of the issue failed to completely sell. Quite common for smaller companies trying to raise money from retail shareholders in these troubling times, but it's no guarantee that it's "smart investors", particularly since most of the trading since the announcement on 12 Nov has been below the $12.30 issue price, and all the trades from 16th November to the 29th November retail closing date were below $12.30.

The issue was fully underwritten, and it is quite possible that Regal was a sub-underwriter, meaning that it may have been committed to take up the retail shortfall at $12.30, whether it was a smart thing to do or not. Maybe it bought extra discounted stock off the underwriters at below $12.30 - I haven't seen conclusive info as to whether that happened (though it looks likely).

As the price was $13.50 to $13.75 in the few days before the 4 for 27 issue, and it closed at $13.65 on Fri 9 Nov prior to the announcement on Monday 12 Nov, so the Theoretical Ex Rights Price was $13.48. So, AUB is currently trading 8.7% below the TERP and over the same period the ASX200 has fallen 5.4%.

Regal is about breakeven on the stock they bought at $12.30 and a bit ahead on some stock they got at $12.10 - possibly from desperate sub-underwriters trying to exit at a discount because they couldn't match their committment. This may mean Regal has over-committed.

The reason that this is important is that many funds like Regal like to stay below the 5% notification level of a company's capital - that way they are free to trade stock without having to put in substantial shareholder declarations. Now that they have moved above 5% they will have to declare when they sell more than 1% of the company's capital, and if they move below 5% and become non-substantial. That limits their freedom, as the rest of the market is able to see what they're doing, and often a declaration of selling elicits the assumption that the whole line of stock could be for sale and put more downward pressure on the share price.

So, it would be good to know if Regal really is so smart that this is a great deal; or if they just got caught on a sub-underwriting agreement; or if they actually got in cheaper than $12.30 by buying off the underwriters at a big discount.

As an aside, I note that Regal's substantial notice shows that they bought 713,234 shares for $8,772,778.20 on Dec 7 - so they paid $12.30. That looks prima facie like they were hit with an underwriting shortfall - but there could be another explanation. Retail shareholders only took up 0.1m shares of their 1.5m entitlement, leaving subbies to take up 1.4m shares. It looks like Regal got saddled with about half of this massive shortfall. That could mean they are smart, or it could mean they made a big overcommittment to the subunderwriting and didn't realise they'd get hit with so much stock. It appears they were also buying on 22 and 23 November in the week prior to the retail issue closing - maybe they thought it was cheap, maybe they were worried about retail takeup of the issue? They bought again on Nov 30 at $12.15 and $12.20, but then sold stock on 3 Dec at $12.42 - which is a bit odd if you think it's a great buy (could be portfolio construction reasons??). They also made a good purchase of 476,891 shares at $12.10 on 3 Dec and bought some more at $11.99 on 6 Dec. The purchase on 3 Dec was quite possibly some of the retail shortfall, possibly bought at a discount from a subbie who didn't want to take up his full entitlement. The completiof the issue was announced on 4 Dec, so this seems quite possible.

Some answers to these questions would be most appreciated