Q: Happy new year! I read the news that vital hub has issued a short form prospectus, but I don't understand what this means. Does this mean dilution, or is it more positive for the stock? Would it be worth taking a nibble at this point?
5i Research Answer:
VHI issued shares via a bought deal in December, and the prospectus is simply the required regulatory paperwork to register the new shares. There is no 'new' deal. When a company issue shares there is dilution, but what the company does with the money is far more important. The company is doing well and there is strong investment demand for the shares. We would be fine buying a small position, reflective of its small cap risks and valuation.