Dominion to resume trading today with no trading band

The PSE notified the market that it will lift the Dominion Holdings [DHI suspendedl] [link] trading suspension today that was first imposed on the company back in 2020 when BDO [BDO 147.00, up 3.7%; 122% avgVol] sold its interest in DHI (then known as BDO Leasing and Finance) and the transaction was deemed a backdoor listing. The agreement governing the sale of BDO’s interest was terminated in 2021 “for failure to comply with the closing conditions of the transaction”. As part of DHI’s comprehensive disclosure, the company said that BDO owns 88.54% of DHI’s shares, that the company did not have a “substantial change in its shareholding structure”, and that the company “did not undergo a financial restructuring... or any other proceeding.” The PSE noted that DHI will begin trading today without a static threshold because the shares have not been traded since January 2020. The static threshold is also called the “trading band”; it’s the PSE-imposed limit on the gain (+50%) and loss (-30%) in a single day of trading.

MB bottom-line: I have no opinion on DHI, its business, the SEC suspension, or BDO’s continued ownership of the company. The thing that bothers me here is the removal of the trading band. The PSE only does this when a company comes off of a long-term suspension, lists after a massive follow-on offering, or when a company is added to the exchange “by way of introduction”. In either case, the argument is that because there’s no price history there’s no data to use to calculate the trading band, and therefore, there’s no way to apply a trading band. And in either case, the market reacts predictably: with absolutely ridiculous one-day price fluctuations that reverberate in the price action of the stock for months. The first time I covered this phenomenon was for the IPO by way of introduction of Altus Property Ventures [APVI] back in 2020 [MB link]. We saw the lunacy in action again with LFM Properties [LPC]. But a closer analog to what will happen today is probably something like the trading suspension lift off of Steniel Manufacturing [STN] [MB link] which saw the stock jump 388% in one day. But that was just the closing price. The intraday price had the stock up 638% in the first few minutes of trading to levels that the stock has since failed to reach. I know the PSE doesn’t care for what I have to say about the matter, so my point in bringing all this up is just to say to traders: be careful. DHI’s price action today might be hilarious but the float is tiny and I don’t have a lot of confidence that you’ll be able to exit any positions in an orderly way. Don’t play unless you have a plan. Once “fun money” starts flowing, anything can happen and it doesn’t usually end well for the majority of people who get involved.

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