A Boston-based investment fund has emerged as a substantial shareholder in Clive Donner’s LinQ Resources Fund after spending close to $30 million on the company’s ordinary units late last month.
Weiss Capital LLC’s move on to LinQ’s share register follows a substantial increase in the shareholding by London-based fund manager Carrousel Capital, and had stockmarket insiders speculating about a potential takeover.
At the time of printing LinQ units were trading at $1.07.
Weiss Capital LLC acquired 28.8 million ordinary units in LinQ at an average price of $1.01 on three days late last month to gain a 12.5 per cent stake in the fund.
Weiss’s buying spree started on January 19, the same day about 130 million LinQ options expired. The options were exercisable at $1 per unit.
Weiss bought 250,000 ordinary units on January 19 at an average price of $1.03. On January 24 the fund bought a further 200,000 units at an average price of $1.03 cents and then spent $28.3 million on units with an average price of $1 on January 25.
Weiss has become LinQ’s second biggest shareholder behind Carousel Capital Ltd, which increased its holding in LinQ units on January 30 by four per cent by exercising more than 20 million options.
Carousel Capital has 15 per cent of the company’s stock.
LinQ was established in 2002 by Rothschild Australia Group as an unlisted trust in March 2002 and was previously known as the Golden Arrow Fund II. It raised $83 million at $1 per unit for its ASX listing on January 20, 2005.
LinQ had a net asset value of $181.1 million at September 30.
A research report complied by Austock Securities in December said that January’s options expiry had the potential to provide the fund with $131 million, which could be used for “larger scale structured finance opportunities”.
But the broker said if LinQ did not invest the cash it may impact on the fund’s performance.
It said LinQ’s fund had been burdened by a large cash balance, which dragged down the effective contribution of its investments.
The reports said that LinQ had underperformed its closest peers AuSelect Ltd and Lion Selection Group Ltd during 2006.
Mr Donner was unavailable for comment.
