GYRO - Gyrodyne Co. of America

[onyx1]

Will the decision be made tomorrow?

 

I'm thinking weeks/months.  The judges heard oral arguments and submissions for 25 other cases so they have lots of work to do.

[thomcapital]

Thanks Onyx!

[cmattporter]

Can someone explain why this is attractive? I'm having trouble finding it's niche.

[eclecticvalue]

cmattporter, They are planning to liquidate the company and the value of the liquidation can get higher if they receive the payment from the court case. The court has to overturn the appeal from the state.  This is not about the fundamentals of the company since it seems it wasn't well run and it will be liquidated anyway. Check this writeup for better details of the case although the writer doesn't have a position. http://valueslant.com/2011/07/18/gyrodyne-gyro-legal-thriller/

[mloub]

Good news for those who invested in this nifty little special situation. The Appeals Court has just overturned the State's appeal against a State Court Judgement awarding Gyrodyne $125million for the appropriated land (of which Gyrodyne had already received about $25m). The outstanding $100 million plus five years interest at 9% p.a. must now be paid to Gyrodyne. I am not sure if the State of New York has any further appeal options (I guess the next stop would be the Supreme Court, which I am sure would have no interest in hearing the case), but in any case, it is good news for Gyrodyne shareholders.

 

As many know, Phil Goldstein of Bulldog Investors, owns a large stake and has twisted management's arm into promising a return of capital to shareholders by either a sale or special dividend when the case was settled.

 

The Appeal Court's Decision and Order can be found here:

http://www.nycourts.gov/reporter/3dseries/2011/2011_08562.htm

 

M.

 

[onyx1]

Good news for those who invested in this nifty little special situation. The Appeals Court has just overturned the State's appeal against a State Court Judgement awarding Gyrodyne $125million for the appropriated land (of which Gyrodyne had already received about $25m). The outstanding $100 million plus five years interest at 9% p.a. must now be paid to Gyrodyne. I am not sure if the State of New York has any further appeal options (I guess the next stop would be the Supreme Court, which I am sure would have no interest in hearing the case), but in any case, it is good news for Gyrodyne shareholders.

 

As many know, Phil Goldstein of Bulldog Investors, owns a large stake and has twisted management's arm into promising a return of capital to shareholders by either a sale or special dividend when the case was settled.

 

The Appeal Court's Decision and Order can be found here:

http://www.nycourts.gov/reporter/3dseries/2011/2011_08562.htm

 

M.

 

Huzzah!  :)

[eclecticvalue]

Yeah!!! It is about time ;D. GYRO is planning a liquidation event. You can see more info here http://www.secinfo.com/d16Kxp.z7u.c.htm check EX-99.2  Don't know how long it will take but it is the plan for now. We shall see what else is revealed at the shareholders meeting Dec. 9th. This couldn't have happened at a better time, right before thanksgiving.

[Tim Eriksen]

Yeah!!! It is about time ;D. GYRO is planning a liquidation event. You can see more info here http://www.secinfo.com/d16Kxp.z7u.c.htm check EX-99.2  Don't know how long it will take but it is the plan for now. We shall see what else is revealed at the shareholders meeting Dec. 9th. This couldn't have happened at a better time, right before thanksgiving.

 

Put me in the skeptical camp in terms of GYRO to do any liquidation event.  They just did a rights offering issuing raising $10 million and diluting shareholders while the case was still on appeal.  It made no sense to me.  If they were confident they were going to win the appeal, they were selling shares way to low.

 

By the way the link is from 2005. 

[given2invest]

rights offering isn't dilution, per se.  crappy secondaries and/or pipes in the hole without shareholders chance to participate is dilution. 

 

but i agree that it's odd they'd raise money when they are just going to liquidate.

[eclecticvalue]

Thanks for pointing that out the link is from 2005  ;D.  In this environment, they could buy real estate very cheap which could generate value going forward and the Price per share could increase. I think the rights offering was a hedge if the court case dragged on any longer.  Since they will be reimbursed for fees they can use the cash from the rights offering to pay down liabilities.

[eclecticvalue]

Looking at the latest 8-k it seems the case can drag on. I still think the rights offering was a hedge, at least GYRO is guaranteed

1.5 million in legal fees from the appellate court.

 

As you all now know, on November 23rd, the Appellate Division of the Supreme Court announced that it unanimously affirmed the earlier decision and awards by the Court of Claims and thus denied the State’s request for a new trial. The State can now make one or more motions for leave to appeal to the Court of Appeals and has until December 30th to do so.

 

Did anyone attend the annual meeting I would like to know what was asked during the Q/A session?

[mloub]

It was good to have the appeal options spelled out. From the state's point of view they have to ask themselves what the chances are that they can have this decision over-turned on appeal - something which any rational person would have to conclude is pretty slim. Paying a 9% per annum premium the longer you stall is not an appealing option, so there is a reasonable chance the State will let the December 30th deadline pass.

 

I guess we just have to wait and see. If the payout does happen, it was nice to hear management commit once again to a liquidity event, and it is nice to see that the $50m in interest income will have to be dividend out to meet the REIT tax requirements.

 

I second the call for input from anyone who attended the meeting and can shed some light on the Q&A.

 

M.

 

 

[mloub]

More waiting for GYRO holders. The State just filed a notice of appeal two days short of the deadline. I guess we have to settle for 9% interest while we wait.

 

I must say, having reviewed the original decision, and the Appellate Court's decision, I think the State's chances are slim.

 

http://sec.gov/Archives/edgar/data/44689/000143774911009879/0001437749-11-009879-index.htm

 

M.

 

[eclecticvalue]

Ok guys, I decided to exit out of this one. Luckily the court ruled in GYRO's favor again. This time I will not take the chance and wait for the liquidity event (if there will be one). The current market cap is reaching the high end of the valuation. One could wait for a higher amount. if a liquidation occurs. I have estimated it at $109 per share.

 

        This position has been successful and tested my patience. At one point I was down 40% luckily I did not lose my cool and it has turned out to be a great one.

[onyx1]

NY State's final motion for leave to appeal is denied.  Congrats to all longs!

 

http://www.nycourts.gov/ctapps/Decisions/2012/Jun12/DecisionList060512.pdf

[eclecticvalue]

Wow that was a long time. It goes to show how long these cases play out. Again you have to be really patient. I am sure this position was great for bulldog partners. It will be interesting to see how the liquidity event plays out and if the company will liquidate itself. It can be similar to RHDGF where the management finds the opportune time to maximize the value of their properties.

[onyx1]

Wow that was a long time. It goes to show how long these cases play out. Again you have to be really patient.

 

True, but in this case 9% interest makes the wait much easier.

[benhacker]

Does anyone have a position here?  Any thoughts you'd care to share?

[krazeenyc]

Does anyone have a position here?  Any thoughts you'd care to share?

 

I just covered my short around $7.25 - $7.35 . I started watching the situation when the stock dropped 12/30. 12/31 the stock traded around $13 -- I was wondering if the stock included the $10.89 dividend or not -- tried to call GYRO couldn't get in touch.  I finally got in touch with the CEO on Jan 2 stock is trading with no more dividends attached -- shorted as much as I could through various brokers (which was not much). I hate shorting most things .... I never know what could happen to kick my butt. Theoretically 20+% left of downside.

[Hielko]

I looked at shorting, but couldn't get a borrow. Was probably a bit too late...

[SFValue]

Does anyone have a position here?  Any thoughts you'd care to share?

 

I just covered my short around $7.25 - $7.35 . I started watching the situation when the stock dropped 12/30. 12/31 the stock traded around $13 -- I was wondering if the stock included the $10.89 dividend or not -- tried to call GYRO couldn't get in touch.  I finally got in touch with the CEO on Jan 2 stock is trading with no more dividends attached -- shorted as much as I could through various brokers (which was not much). I hate shorting most things .... I never know what could happen to kick my butt. Theoretically 20+% left of downside.

 

did you cover because of your aversion to shorting? I am having trouble conceiving a scenario where you get materially hurt short here, unless the understanding of DTC/ex-dates is wrong

 

 

 

[krazeenyc]

Does anyone have a position here?  Any thoughts you'd care to share?

 

I just covered my short around $7.25 - $7.35 . I started watching the situation when the stock dropped 12/30. 12/31 the stock traded around $13 -- I was wondering if the stock included the $10.89 dividend or not -- tried to call GYRO couldn't get in touch.  I finally got in touch with the CEO on Jan 2 stock is trading with no more dividends attached -- shorted as much as I could through various brokers (which was not much). I hate shorting most things .... I never know what could happen to kick my butt. Theoretically 20+% left of downside.

 

did you cover because of your aversion to shorting? I am having trouble conceiving a scenario where you get materially hurt short here, unless the understanding of DTC/ex-dates is wrong

 

Yes --  I made appx 40% b/c of market confusion -- I consider myself lucky.  Management has said the remaining stub is $5.70. That means from the point I covered I had about $1.50 left to make give or take  -- time frame would be unclear as well .  At some point people have to cover -- I assume large sellers are all out. And of course, what happens on the off chance I am wrong about the dividend -- or the CEO is confused about the mechanics at DTC. I know TDAmeritrade corporate actions team had no clue.  I'm okay with missing out on the last  10-15% of the trade.

[SFValue]

Does anyone have a position here?  Any thoughts you'd care to share?

 

I just covered my short around $7.25 - $7.35 . I started watching the situation when the stock dropped 12/30. 12/31 the stock traded around $13 -- I was wondering if the stock included the $10.89 dividend or not -- tried to call GYRO couldn't get in touch.  I finally got in touch with the CEO on Jan 2 stock is trading with no more dividends attached -- shorted as much as I could through various brokers (which was not much). I hate shorting most things .... I never know what could happen to kick my butt. Theoretically 20+% left of downside.

 

did you cover because of your aversion to shorting? I am having trouble conceiving a scenario where you get materially hurt short here, unless the understanding of DTC/ex-dates is wrong

 

Yes --  I made appx 40% b/c of market confusion -- I consider myself lucky.  Management has said the remaining stub is $5.70. That means from the point I covered I had about $1.50 left to make give or take  -- time frame would be unclear as well .  At some point people have to cover -- I assume large sellers are all out. And of course, what happens on the off chance I am wrong about the dividend -- or the CEO is confused about the mechanics at DTC. I know TDAmeritrade corporate actions team had no clue.  I'm okay with missing out on the last  10-15% of the trade.

 

thank you

 

regarding time frame this situation should be clear one way or another by pay date (en of January)

[bskptkl]

Does anyone have a position here?  Any thoughts you'd care to share?

 

I just covered my short around $7.25 - $7.35 . I started watching the situation when the stock dropped 12/30. 12/31 the stock traded around $13 -- I was wondering if the stock included the $10.89 dividend or not -- tried to call GYRO couldn't get in touch.  I finally got in touch with the CEO on Jan 2 stock is trading with no more dividends attached -- shorted as much as I could through various brokers (which was not much). I hate shorting most things .... I never know what could happen to kick my butt. Theoretically 20+% left of downside.

 

did you cover because of your aversion to shorting? I am having trouble conceiving a scenario where you get materially hurt short here, unless the understanding of DTC/ex-dates is wrong

 

Yes --  I made appx 40% b/c of market confusion -- I consider myself lucky.  Management has said the remaining stub is $5.70. That means from the point I covered I had about $1.50 left to make give or take  -- time frame would be unclear as well .  At some point people have to cover -- I assume large sellers are all out. And of course, what happens on the off chance I am wrong about the dividend -- or the CEO is confused about the mechanics at DTC. I know TDAmeritrade corporate actions team had no clue.  I'm okay with missing out on the last  10-15% of the trade.

 

thank you

 

regarding time frame this situation should be clear one way or another by pay date (en of January)

 

I was long the liquidation - sold what I was long on 12/31 and shorted all could borrow (which was a little more than I was long). So upon merger being consummated I will soon be long again (we get 5.58x new GYRO versus what were long old GYRO). I think it is still safe to be short for that reason.

 

The numbers thrown out in 12/27 8k seem like an attempt to anchor on $6 or $5.70 for new market price where I think using old book value (I get $4.41) may be a better guide to where it will settle out.

[SFValue]

Does anyone have a position here?  Any thoughts you'd care to share?

 

I just covered my short around $7.25 - $7.35 . I started watching the situation when the stock dropped 12/30. 12/31 the stock traded around $13 -- I was wondering if the stock included the $10.89 dividend or not -- tried to call GYRO couldn't get in touch.  I finally got in touch with the CEO on Jan 2 stock is trading with no more dividends attached -- shorted as much as I could through various brokers (which was not much). I hate shorting most things .... I never know what could happen to kick my butt. Theoretically 20+% left of downside.

 

did you cover because of your aversion to shorting? I am having trouble conceiving a scenario where you get materially hurt short here, unless the understanding of DTC/ex-dates is wrong

 

Yes --  I made appx 40% b/c of market confusion -- I consider myself lucky.  Management has said the remaining stub is $5.70. That means from the point I covered I had about $1.50 left to make give or take  -- time frame would be unclear as well .  At some point people have to cover -- I assume large sellers are all out. And of course, what happens on the off chance I am wrong about the dividend -- or the CEO is confused about the mechanics at DTC. I know TDAmeritrade corporate actions team had no clue.  I'm okay with missing out on the last  10-15% of the trade.

 

thank you

 

regarding time frame this situation should be clear one way or another by pay date (en of January)

 

I was long the liquidation - sold what I was long on 12/31 and shorted all could borrow (which was a little more than I was long). So upon merger being consummated I will soon be long again (we get 5.58x new GYRO versus what were long old GYRO). I think it is still safe to be short for that reason.

 

The numbers thrown out in 12/27 8k seem like an attempt to anchor on $6 or $5.70 for new market price where I think using old book value (I get $4.41) may be a better guide to where it will settle out.

 

it all comes down to the 10.89 notes dividend (is it in or not), regardless of what you get as dividend from your previous long position or am I misunderstanding you?