ZFC - Zais Financial Corp

[writser]

Disclaimer: this is more a trade than a long-term investment.

 

Zais financial is a residential mortgage REIT, merging with Sutherland Asset Management. For the whole story, do your own diligence. There are a few articles on SeekingAlpha, for example this one. Long story short: tangible book is around $16.50. As part of the merger ZFC will return cash to shareholders beforehand. Today ZFC announced that "in no event will the tender offer price be lower than $15.36 per share." (link). ZFC also announced a $0.40 dividend. So, you can buy shares for ~$14.00 today (was even cheaper on the opening), pocket a $0.40 dividend in a few weeks and sell at least half your position for $15.36 afterwards. That leaves you with a small position at a break-even price of $12.24, ignoring taxes. I think that's a decent proposition. You can either do your own work on the combined company and hold on to your shares or try to sell somewhere down the way. It wouldn't surprise me if the price jumps a bit when the tender offer is announced.

 

The merger vote is 27 September and the deal is expected to close this year.

 

I might be missing all sorts of things but I bought a couple of shares. Anybody familiar with this deal?

 

 

[writser]

Up ~4% since I bought. I think it's still a decent bet though. Somebody wrote a blogpost explaining the situation in more detail:

 

http://clarkstreetvalue.blogspot.nl/2016/09/zais-financial-merger-w-private-reit.html

[writser]

It wouldn't surprise me if the price jumps a bit when the tender offer is announced.

 

Shareholders approved the merger yesterday. Directly afterwards the tender offer was initiated (filing) for ~50% at 15.37. I have sold the majority of my position at 14.60 for an ~8% gain in two weeks (including dividend). Imho the current price more or less reflects the risk of  shares trading down after the tender offer and I am too lazy / incompetent to do any research on the company post-merger.

[writser]

I got greedy yesterday and tried to sell my remaning position at 14.90 (I already sold 4/5th of it). My offer didn't get hit obviously .. Anyway, preliminary tender results are in: proration factor is 69%. Assuming I can sell the rest around $13 the average price for the remaining chunk is around $14.60 as well. I bought at 13.46, adjusted for dividend. 8% return in a few weeks. Decent result.

 

For those who are interested (if any), a couple of other corporate actions I am currently invested in: CTF, FDVF, GWSV, TSL, MOBI, STJ, MEG, MHGC, AIXG (auch!). A few corporate actions that look interesting but I haven't pulled the trigger on as I'm short on cash: IOC, GNW, Pharmstandard, ISLE, VA.

[Icarus]

Thanks for the helpful list of corporate actions.  It'll be a good starting point to look for some trades that are less correlated with the rest of the market.

 

It's unfortunate that there aren't as many odd lot tender offers around as before, but if you want something similar there's Marine Products Corp that will buy from you first if you have 1 share lol

 

From SEC filing:

 

In what order will we purchase the tendered shares?

 

First, all shares that have been validly tendered (and not validly withdrawn prior to the Expiration Time) by holders of only one share