Trade Actions
Description
There are five main trade actions possible regarding stocks:
- Buy from public: This allows you to buy stock from The Public (assuming there are available shares). You can see the amount of shares owned by the public in the financial overview table located in the Company Info Panel. Once you click this button, you will be prompted to select the percentage of ownership you wish to have. You will also be shown the cost of the transaction.
- Acquire control from parent: This allows to take control a company controlled by another company. As a rule, companies will ask you a premium over the current market price, as well as a minimum percentage of purchase. Additionally, you will be shown the cost of the transaction. You are free to choose whatever values for the premium and the percentage to buy, but it will very unlikely that the counterparty will accept your proposal if it goes below what they are asking. There are two possible outcomes from this operation (after you click confirm):
- Success: in this case, the financial overview table will be updated and your company will appears the new parent company.
- Failure: in this case, you will be shown a message regarding the parent company rejecting your offer. This won't have any cost for you, but you won't be able to try to acquire the same company in the current turn.
- Sell stock: Select the amount of percentage you wish to sell of the company. This percentage is always relative to the total company, not your relative position. Example: if you own 10% of a company and you select to sell 3%, your ownership will be now 7%. You will also be shown the cost of the transaction (in this case, the pre-tax money you will receive).
- Sell stock short: Select the percentage you wish to sell short. You can only short shares available to the public. Shorting has an annual fee relative to the company's market cap, which increases with the proportion of available shares to the public you wish to short. The minimum fee is 1% and the maximum one is 20%, which is deducted each month. Example: If 5% of the company is available to the public and you wish to short the full 5%, then the annual fee will be 20% of the company's market cap, deducted each month.
- Cover short position: Select the percentage you wish to cover from your short position.
All stock transactions are done in percentages of the total amount of shares. The minimum non-zero transaction amounts to 0.01% of the total shares. For the action Acquire control from parent, the minimum percentage to buy is 50.01%.
Additional remarks:
- When buying or shorting, the program will check whether you solvency ratio will go below the minimum required to keep playing. If so, the transaction will be denied and it will be shown the hypothetical solvency ratio you would get from that transaction. If you are performing the Acquire control from parent action and it fails because of your solvency ratio going too low, you can still try it more times during the same turn (the one-per-turn restriction only applies if the transaction is denied due to a rejection from the parent).
- If you are shorting a company and at any point the percentage of shares available to the public is less than the percentage you are shorting, the program will automatically cover enough percentage. Example: you are shorting 10% of a company, and at some point the amount of shares available to the public drops to 6%. In that case, you will automatically have to cover 4% of your shorting position, registering a profit or loss depending on the situation. Also, the annual fee will be recalculated. In the previous example, the annual fee will be now 20% of the target company's market cap.
Strategy tips
- Be careful with over-investing, specially in risky transactions such as shorting. You can become quickly insolvent if you go beyond your means.
- Shorting incurs in monthly fees, so it is usually a good idea to avoid keeping open positions for too long. Even though you may have an unrealized profit, the shorting fees may cancel and even make the whole operation unprofitable. Also, pay attention if the company you are shorting start being bought since this will affect the amount of available shares for shorting. This will increase the fees, and you may be forced to cover the position prematurely.