Cable One shares had a banner first day of trading on a when-issued basis Thursday, topping $400 per share amid relatively light volume.
Cable One is expected to be officially spin off from parent Graham Holdings on July 1 at 12:01 a.m., with “regular way” trading on the New York Stock Exchange expected thereafter. The stock began trading on the when-issued market on June 11 and had a strong showing.
The stock, trading under the symbol “CABO.WI” opened on June 11 at $400 per share and rose as high as $405 each. It closed at $399.84 per share. According to the NASDAQ web site, only 8,220 shares were traded on June 11. In contrast, on a typical day, between 10 million and 20 million shares of Comcast are traded.
“We are all happy the spin-off is finally within sight and look forward to operating soon as an independent company," Cable One CEO Tom Might said in a statement. "The opening of “when-issued” trading is a big milestone for all involved and the initial price must be gratifying to Graham Holdings, since the market valued all of GHC for as low as $333 per share less than three years ago.”
While Cable One’s first day on the when-issued market looked lucrative – at nearly $400, the shares are trading about eight times Comcast and three times Charter and Time Warner Cable – the shares are priced at about a third of parent Graham Holdings. GHC closed at $1,085.00 per share on June 11, up 1.4% ($14.51 each). One of the main reasons for GHC’s high trading price is its scarcity – it only has 4.9 million shares outstanding, compared to about 3 billion for Comcast.
When-issued shares can be bought or sold like ordinary securities, except that transactions do not settle until the stock is formally issued. The attraction: trading in when-issued shares usually require a small down payment of about 25% of the value of the shares and no margin or loan debt is needed for the balance until the settlement date, which can be weeks in the future.
When-issued prices can be a benchmark, but they can also vary widely from the regular trading price. Cable One shares are expected to begin regular trading on the NYSE on July 1, immediately after the company is officially spun-off from Graham Holdings.
The spin will be a tax-free distribution to Graham shareholders of record as of June 15, who will receive one share of Cable One stock for every Class A and Class B Graham Holdings share they own. Earlier in June, Graham announced that Cable One also will issue about $550 million in debt, which will be used to pay a one-time cash dividend to Graham Holdings.