What: The good times are continuing for shareholders in agribusiness stock Elders Ltd (ASX: ELD) today with the shares up a further 6.6% by lunchtime.
The rally is thanks to an announcement by the company this morning that Elders will buy back a portion of the Elders Hybrids from long suffering holders.
So What: The Hybrids have been a sore point for investors for many years, with the stock – which was issued in 2006 with a face value of $100 – sinking to a low of $8 in mid-2013. For contrarian investors who picked the bottom, they're currently sitting on a ten-bagger!
The hybrids have also been a sore point for investors in Elders ordinary shares as their status has not only led to uncertainty but it has also prevented a dividend being paid.
Now What: For holders of the hybrids, Elders has today announced that it will offer at its "sole and absolute discretion to accept more or less than $30 million of Hybrids, at a price of up to (and including) $80 per Hybrid."
While this is a 20% discount to face value, it will no doubt be a welcome development for some holders who may see the offer as an opportunity to get out and move on.
Judging by the near 7% increase in Elders' share price today, the market is presumably viewing this strategic move by the board as a positive one.
Elders' share price has now rallied a massive 91% in the past 12 months which makes it one of the best performing agricultural stocks on the ASX. The other close contender for top stock is almond producer Select Harvests Limited (ASX: SHV) which has gained 105% on the back of strong global almond prices.