Woodside (WPL) shares fell 4.5% yesterday (to $40.90) after investors sold off nearly 53 million shares, worth almost $2.2 billion in the wake of the sell down by Shell.
Brokers said much of the turnover was from investors and others selling the shares they picked up in Shell’s placement before having to pay for them.
The selling is likely to go on for a while, perhaps the rest of the week, before turnover in the stock returns to normal.
The Shell shares were placed with investors at $41.35 each, so the selling was done above that price, meaning investors made a nice profit.
The shares traded in a range of a high of $41.36 to a low of $40.74.
That the shares ended higher than the exit price for the Shell placement tells us there was underlying demand for the shares.
The 4.4% fall was the biggest since last July and driven by the investor selling, not a downgrading of Woodside’s prospects after the Shell sell-down.
Most brokers reckon the sell-down and Woodside’s buyback will be of greater benefit to the long time valuation of the company than yesterday’s fall.
Woodside has to complete a $US2.68 billion buy-back of a further 9.5% of its stock from Shell as part of the two-part process.
That is seen as boosting the company’s dividend yield and earnings per share, and helping lift the company’s attraction to new investors.
Woodside’s buy-back still has to be approved by shareholders at a meeting expected in early August because the deal includes Shell accessing Woodside’s franking credits.
While some big investors privately voiced concern about that part of the deal, few will oppose the deal at the special shareholder meeting.
