Alfa’s financial investment ($PRE.to, ALFAA.mx)

ALFA, a big Mexican conglomerate, said in May it had bought 31,437,700 shares of Pacific Rubiales Energy Corp. (PRE.to), or 10% of the company. It disclosed after buying some shares for $18.43, which at the time was a low price for PRE.

Then, in August, Alfa announced it had bought 9 million shares of PRE.to at $21 a share, bringing its total holding to 17%.

We don’t know exactly how much Alfa spent on its PRE.to shares, but we know from Canadian regulatory filings that from May 20 to August 20, Alfa paid an average $21.03 per share, or $489 million.

At that point, things were looking good. Those 53,657,900 shares closed that day at $21.65 apiece, for a total value of C$1,162 million.

Price action since then:

Screen Shot 2014-10-06 at 2.36.47 PM

At the current price of $17.88, that decline works out to a paper loss of $200 million on Alfa’s shares since that Aug. 20 press release. (From $1,162 million to $961 million. Feel free to check my math, I failed basic arithmetic.)

I’m no expert in trading patterns, but I have a theory here.

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