Invest Skeptically

This is another sorry tale of the aggressive underwriting that was rampant during the Canadian income trust boom.

Barry Critchley of the National Post wrote, Investors at loss to grasp revaluation Stephenson’s Rental premium questionable, on June 4, 2007. He reports on how Scotia Capital led the IPO (and subsequently Scotiabank provided debt financing to the company). The IPO price was $10 per share in late 2005. Fast-forward to May 2007 and we find Scotia providing a fairness opinion in favour of Edgestone Capital’s $6.875 bid for the company. Critchley quotes one shareholder who says, “how can they justify telling the retail investors to buy it at $10 in 2005 now they are telling them to sell it for less than $7″. Stephenson’s has never missed a distribution.