The volume around David Jones – it does go to 11!








UPDATE: AFR is reporting that “ASIC has confirmed it has launched an investigation into trading in David Jones’s shares and disclosure issues relating to an abandoned takeover approach”.

As mentioned in yesterday’s ASX Shares Daily, there has been an unravelling debacle over the recent “mystery” takeover bid and subsequent withdrawal for embattled retailer, David Jones (DJS).

From the AFR:

EB Private Equity has withdrawn its $1.65 billion bid for David Jones, citing recent publicity around its proposal for scuttling the plan.

In a statement to the Australian Securities Exchange, David Jones said it had received a letter from EB Private Equity withdrawing its bid, which pushed the retailer’s shares up by 15 per cent on Friday.

“The EBPE letter states that recent publicity around its proposal has made it difficult to proceed,” David Jones said.

Well, I’m glad shareholders got the chance to exit a little richer!?!?

Anyways, at Macro Investor we predicted just this in Monday’s edition:

The takeover offer changes the dynamic of a possible trade immensely, and given the mystery that surrounds the offer it increases the risk potential of a major setback in the price. While the technical price action confirms the falling wedge pattern, the gap due to a dubious takeover bid merely injects another immeasurable risk factor.

This trade is best left alone, but should be monitored for a pullback that does not go below the previous trend, which would confirm support of a new bull trend.

Which is what has transpired, with shareholders realising the fog was not clearing at all, but likely pumped up by a smoke machine borrowed from Spinal Tap, as the share price fell over 10% and right back below the previous trend line:

The boffins at ASIC will be busy dissecting each and every trade leading up to yesterday, for sure. And the timing of the offer right at the end of the financial year has left a foul stench to boot.

For those interested in a longer term view, instead of this rambunctious trading, David Jones was valued in the 2nd pre-launch edition of Macro Investor – here’s the current valuation and the forecast estimate:

For a 21 day free trial, register at Macro Investor which has launched with a special 20% discount offer for MacroBusiness readers that brings the price down to $385 until the end of July ’12.


  1. at least one of us is hoping that your MI venture is going to put a convincing case that equities are more than just a casino for the fast and furious….

    so best wishes….or is that lots of luck with MI…..wishing for your success

  2. I prefer to call it the EB scam.
    they pulled out not because of the adverse publicity but because their 10% turn on positions opened prior to the ” indicative bid” was sufficient . if they chose to double up with a short position that would be dangerous.
    ASIC should be developing a protocol for listed companies to observe in these situations.

      • I’ve been away for a while and have found it hard to be interested in the past six months (gotta love central planning and contstant interventions) – have been fully out of the market and working on my currency trading.

        Good to see MI is taking such a sensible approach.

  3. The lack of dd done by the board prior to the release is extraordinary.
    Could have rang just one aust company mentioned to be working with the so called bidder to get the rat part way out of the bag?
    Really has made djs/asx look a bit like the aust boarder protection guys re 4 corners.

  4. oohh ASIC are investigating …what to establish that EB has conducted its trading from offshore jurisdictions ?
    what ASIC should have been doing was developing with the industry – the securities industry- a due diligence protocol to ensure that such EB scams are far more difficult to conduct .
    for example: immediate halt to trading requiring target company to obtain from would-be bidder the essentials..the sort of disclosure seen in a prospectus ….auditor, place of incorporation, accounts, lawyer/banker/adviser …it’s a long list ..and allow the market to determine if the bid is legitimate.