GYRO - Gyrodyne Co. of America

[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.

 

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?

 

No - I think it is clear (in talking to company and my broker) that one needed to be a record holder on 12/31, thus own it as of close 12/27 to get the 10.89 dividend. But we will get the dividends (both of the non cash dividends) in the form of new GYRO. So shares out will go from 1.48 million before merger to 9.7 million post merger. The selling pressure then would be tremendous I presume.

[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?

 

No - I think it is clear (in talking to company and my broker) that one needed to be a record holder on 12/31, thus own it as of close 12/27 to get the 10.89 dividend. But we will get the dividends (both of the non cash dividends) in the form of new GYRO. So shares out will go from 1.48 million before merger to 9.7 million post merger. The selling pressure then would be tremendous I presume.

 

Ok..i was just pointing out that the issue is if you get the dividend or not (in case you are short, you owe it) is what

matters.

 

 

[bskptkl]

I spoke with CEO this morning. He confirmed 12/27 as ex date for 10.89 dividend. He said merger could happen in March if SEC is ok with 9 months financials. But might happen in June if SEC insists on year end financials. Until then stockholders before the ex dates have the dividends in book entry form presumably. Upon consummation of merger, one would get roughly 5.5 times as much new GYRO. He also confirmed that board of directors wrote up carrying value of real estate to get to the $5.70 book value they quoted in 8k. They increased the carrying value of the real estate by 12 million (32.7 to 45).

 

I was able to borrow more to short from IB and have hedged most of my year end position - still slightly net long though and trying to borrow more. IB charges 11% to borrow, but stock at $7.50 is a few bucks higher than fair value in my opinion.

[krazeenyc]

I spoke with CEO this morning. He confirmed 12/27 as ex date for 10.89 dividend. He said merger could happen in March if SEC is ok with 9 months financials. But might happen in June if SEC insists on year end financials. Until then stockholders before the ex dates have the dividends in book entry form presumably. Upon consummation of merger, one would get roughly 5.5 times as much new GYRO. He also confirmed that board of directors wrote up carrying value of real estate to get to the $5.70 book value they quoted in 8k. They increased the carrying value of the real estate by 12 million (32.7 to 45).

 

I was able to borrow more to short from IB and have hedged most of my year end position - still slightly net long though and trying to borrow more. IB charges 11% to borrow, but stock at $7.50 is a few bucks higher than fair value in my opinion.

 

I wonder if GYRO will get sued at all -- because there really was some confusion. I think for someone like you who already had a position shorting is perfect -- because your not really shorting the stock -- you're just selling the stock you own at a nice price.

[bskptkl]

I spoke with CEO this morning. He confirmed 12/27 as ex date for 10.89 dividend. He said merger could happen in March if SEC is ok with 9 months financials. But might happen in June if SEC insists on year end financials. Until then stockholders before the ex dates have the dividends in book entry form presumably. Upon consummation of merger, one would get roughly 5.5 times as much new GYRO. He also confirmed that board of directors wrote up carrying value of real estate to get to the $5.70 book value they quoted in 8k. They increased the carrying value of the real estate by 12 million (32.7 to 45).

 

I was able to borrow more to short from IB and have hedged most of my year end position - still slightly net long though and trying to borrow more. IB charges 11% to borrow, but stock at $7.50 is a few bucks higher than fair value in my opinion.

 

I wonder if GYRO will get sued at all -- because there really was some confusion. I think for someone like you who already had a position shorting is perfect -- because your not really shorting the stock -- you're just selling the stock you own at a nice price.

 

Agree that it was a complicated confusing case. The 25% special dividend language (in FINRA manual) doesn't specify super clearly when the dividend is measured against stock price - when announced or when paid.

 

To be clear, I am short. Sold my long immediately, sold that much again short on day 1 (all I could borrow), and sold about 4x more today when I could get the borrow. The new GYRO when delivered will cover the short. I will sell more if I can borrow more because I think it will sell off when new GYRO is delivered.

 

I figure new GYRO will have 45 million in real estate, 17 million in cash, .8 million other assets against 7.5 million liabilities for equity of 55.3 million over 9.7 million new shares or $5.70. The real estate is not super marketable or they would have sold it already. It won't be particularly undervalued because it was just written up. I don't see how this settles in at book value or greater.  $4 target price seems reasonable.

[krazeenyc]

I spoke with CEO this morning. He confirmed 12/27 as ex date for 10.89 dividend. He said merger could happen in March if SEC is ok with 9 months financials. But might happen in June if SEC insists on year end financials. Until then stockholders before the ex dates have the dividends in book entry form presumably. Upon consummation of merger, one would get roughly 5.5 times as much new GYRO. He also confirmed that board of directors wrote up carrying value of real estate to get to the $5.70 book value they quoted in 8k. They increased the carrying value of the real estate by 12 million (32.7 to 45).

 

I was able to borrow more to short from IB and have hedged most of my year end position - still slightly net long though and trying to borrow more. IB charges 11% to borrow, but stock at $7.50 is a few bucks higher than fair value in my opinion.

 

I wonder if GYRO will get sued at all -- because there really was some confusion. I think for someone like you who already had a position shorting is perfect -- because your not really shorting the stock -- you're just selling the stock you own at a nice price.

 

Agree that it was a complicated confusing case. The 25% special dividend language (in FINRA manual) doesn't specify super clearly when the dividend is measured against stock price - when announced or when paid.

 

To be clear, I am short. Sold my long immediately, sold that much again short on day 1 (all I could borrow), and sold about 4x more today when I could get the borrow. The new GYRO when delivered will cover the short. I will sell more if I can borrow more because I think it will sell off when new GYRO is delivered.

 

I figure new GYRO will have 45 million in real estate, 17 million in cash, .8 million other assets against 7.5 million liabilities for equity of 55.3 million over 9.7 million new shares or $5.70. The real estate is not super marketable or they would have sold it already. It won't be particularly undervalued because it was just written up. I don't see how this settles in at book value or greater.  $4 target price seems reasonable.

 

Here's the weird thing... and why even after talking to the CEO I am a tiny bit confused. If 12/27 was the ex-date -- the stock didn't move down that day. Additionally, DTC didn't have anything regarding the ex-date -- according to corp actions at TD ameritrade. Happy to have participated -- but I'm 5% confused still.

[bskptkl]

I spoke with CEO this morning. He confirmed 12/27 as ex date for 10.89 dividend. He said merger could happen in March if SEC is ok with 9 months financials. But might happen in June if SEC insists on year end financials. Until then stockholders before the ex dates have the dividends in book entry form presumably. Upon consummation of merger, one would get roughly 5.5 times as much new GYRO. He also confirmed that board of directors wrote up carrying value of real estate to get to the $5.70 book value they quoted in 8k. They increased the carrying value of the real estate by 12 million (32.7 to 45).

 

I was able to borrow more to short from IB and have hedged most of my year end position - still slightly net long though and trying to borrow more. IB charges 11% to borrow, but stock at $7.50 is a few bucks higher than fair value in my opinion.

 

I wonder if GYRO will get sued at all -- because there really was some confusion. I think for someone like you who already had a position shorting is perfect -- because your not really shorting the stock -- you're just selling the stock you own at a nice price.

 

Agree that it was a complicated confusing case. The 25% special dividend language (in FINRA manual) doesn't specify super clearly when the dividend is measured against stock price - when announced or when paid.

 

To be clear, I am short. Sold my long immediately, sold that much again short on day 1 (all I could borrow), and sold about 4x more today when I could get the borrow. The new GYRO when delivered will cover the short. I will sell more if I can borrow more because I think it will sell off when new GYRO is delivered.

 

I figure new GYRO will have 45 million in real estate, 17 million in cash, .8 million other assets against 7.5 million liabilities for equity of 55.3 million over 9.7 million new shares or $5.70. The real estate is not super marketable or they would have sold it already. It won't be particularly undervalued because it was just written up. I don't see how this settles in at book value or greater.  $4 target price seems reasonable.

 

Here's the weird thing... and why even after talking to the CEO I am a tiny bit confused. If 12/27 was the ex-date -- the stock didn't move down that day. Additionally, DTC didn't have anything regarding the ex-date -- according to corp actions at TD ameritrade. Happy to have participated -- but I'm 5% confused still.

 

Yeah me too - still the tingle that maybe my short blows up in my face and NASDAQ makes them change ex date or something.

[SFValue]

I spoke with CEO this morning. He confirmed 12/27 as ex date for 10.89 dividend. He said merger could happen in March if SEC is ok with 9 months financials. But might happen in June if SEC insists on year end financials. Until then stockholders before the ex dates have the dividends in book entry form presumably. Upon consummation of merger, one would get roughly 5.5 times as much new GYRO. He also confirmed that board of directors wrote up carrying value of real estate to get to the $5.70 book value they quoted in 8k. They increased the carrying value of the real estate by 12 million (32.7 to 45).

 

I was able to borrow more to short from IB and have hedged most of my year end position - still slightly net long though and trying to borrow more. IB charges 11% to borrow, but stock at $7.50 is a few bucks higher than fair value in my opinion.

 

I wonder if GYRO will get sued at all -- because there really was some confusion. I think for someone like you who already had a position shorting is perfect -- because your not really shorting the stock -- you're just selling the stock you own at a nice price.

 

Agree that it was a complicated confusing case. The 25% special dividend language (in FINRA manual) doesn't specify super clearly when the dividend is measured against stock price - when announced or when paid.

 

To be clear, I am short. Sold my long immediately, sold that much again short on day 1 (all I could borrow), and sold about 4x more today when I could get the borrow. The new GYRO when delivered will cover the short. I will sell more if I can borrow more because I think it will sell off when new GYRO is delivered.

 

I figure new GYRO will have 45 million in real estate, 17 million in cash, .8 million other assets against 7.5 million liabilities for equity of 55.3 million over 9.7 million new shares or $5.70. The real estate is not super marketable or they would have sold it already. It won't be particularly undervalued because it was just written up. I don't see how this settles in at book value or greater.  $4 target price seems reasonable.

 

Here's the weird thing... and why even after talking to the CEO I am a tiny bit confused. If 12/27 was the ex-date -- the stock didn't move down that day. Additionally, DTC didn't have anything regarding the ex-date -- according to corp actions at TD ameritrade. Happy to have participated -- but I'm 5% confused still.

 

Yeah me too - still the tingle that maybe my short blows up in my face and NASDAQ makes them change ex date or something.

 

I am pretty sure that day premarket was in the 5s

[krazeenyc]

I spoke with CEO this morning. He confirmed 12/27 as ex date for 10.89 dividend. He said merger could happen in March if SEC is ok with 9 months financials. But might happen in June if SEC insists on year end financials. Until then stockholders before the ex dates have the dividends in book entry form presumably. Upon consummation of merger, one would get roughly 5.5 times as much new GYRO. He also confirmed that board of directors wrote up carrying value of real estate to get to the $5.70 book value they quoted in 8k. They increased the carrying value of the real estate by 12 million (32.7 to 45).

 

I was able to borrow more to short from IB and have hedged most of my year end position - still slightly net long though and trying to borrow more. IB charges 11% to borrow, but stock at $7.50 is a few bucks higher than fair value in my opinion.

 

I wonder if GYRO will get sued at all -- because there really was some confusion. I think for someone like you who already had a position shorting is perfect -- because your not really shorting the stock -- you're just selling the stock you own at a nice price.

 

Agree that it was a complicated confusing case. The 25% special dividend language (in FINRA manual) doesn't specify super clearly when the dividend is measured against stock price - when announced or when paid.

 

To be clear, I am short. Sold my long immediately, sold that much again short on day 1 (all I could borrow), and sold about 4x more today when I could get the borrow. The new GYRO when delivered will cover the short. I will sell more if I can borrow more because I think it will sell off when new GYRO is delivered.

 

I figure new GYRO will have 45 million in real estate, 17 million in cash, .8 million other assets against 7.5 million liabilities for equity of 55.3 million over 9.7 million new shares or $5.70. The real estate is not super marketable or they would have sold it already. It won't be particularly undervalued because it was just written up. I don't see how this settles in at book value or greater.  $4 target price seems reasonable.

 

Here's the weird thing... and why even after talking to the CEO I am a tiny bit confused. If 12/27 was the ex-date -- the stock didn't move down that day. Additionally, DTC didn't have anything regarding the ex-date -- according to corp actions at TD ameritrade. Happy to have participated -- but I'm 5% confused still.

 

Yeah me too - still the tingle that maybe my short blows up in my face and NASDAQ makes them change ex date or something.

 

I am pretty sure that day premarket was in the 5s

 

But if ex-date is 12/27.... why wasn't the stock down big on 12/27 the whole thing is just bizarre.

[saltybit]

http://gyrodyne.com/recentnews_view.php?id=79

 

For those who were long back in 2014..

 

The merger completes the plan of liquidation for purposes of the Internal Revenue Code. It results in holders of common stock of the Corporation receiving approximately 22.6% (335,086 shares) of the common shares of Gyrodyne in the aggregate (.0904 common share of Gyrodyne per share of Corporation common stock), holders of interests in nontransferable dividend notes issued by the Corporation receiving approximately 30.0% (444,804 shares) of the common shares of Gyrodyne in the aggregate (.025 common share of Gyrodyne per $1.00 principal amount of the dividend notes issued in January 2014 and the dividend notes issued in December 2014, together, in each case, with any interest thereon paid in kind in the form of additional notes), and holders of nontransferable interests in GSD receiving approximately 47.4% (702,790 shares) of the common shares of Gyrodyne in the aggregate (.474 common share of Gyrodyne per GSD interest).

[bskptkl]

Yeah - that took far too long but I finally got my new GYRO for the old notes and the numbers worked out like I thought it would.

The play was to short it right after it went ex dividend around $12-$13 and stay short until now. $28 now = $2.53 then.

I did the first part but covered far too early and went long to boot to squander profits...

What an inefficient market due to mass confusion I suppose.

$28 doesn't look very interesting based on a NAV of $31.41. I can't imagine this management will get it liquidated in a timely manner.

 

 

[saltybit]

I actually hadn't received mine yet.. I own it through fidelity. (mine was for the Jan 2014 notes)

Who was your broker for this? (if you don't mind me asking)

 

Yeah - that took far too long but I finally got my new GYRO for the old notes and the numbers worked out like I thought it would.

The play was to short it right after it went ex dividend around $12-$13 and stay short until now. $28 now = $2.53 then.

I did the first part but covered far too early and went long to boot to squander profits...

What an inefficient market due to mass confusion I suppose.

$28 doesn't look very interesting based on a NAV of $31.41. I can't imagine this management will get it liquidated in a timely manner.

 

 

[fishwithwings]

Yeah - that took far too long but I finally got my new GYRO for the old notes and the numbers worked out like I thought it would.

The play was to short it right after it went ex dividend around $12-$13 and stay short until now. $28 now = $2.53 then.

I did the first part but covered far too early and went long to boot to squander profits...

What an inefficient market due to mass confusion I suppose.

$28 doesn't look very interesting based on a NAV of $31.41. I can't imagine this management will get it liquidated in a timely manner.

 

It doesn't look interesting @ $28 because you only valued it based on a understated NAV.  Consider these two points: Management's bonus is setup to incentivized a fast liquidation but at the highest price possible.  Flowerfield is being rezoned.

There is a optionality in this stock with little downside.  If anyone knows a better stock with such characteristics please let me know b/c right now i'm hard pressed on good ideas.

[Guest MarkS]

I picked up a handful of shares the last couple of days.  The wind down should be finished in the next several months (hopefully). Gamco and Grantham have established positions recently and Michael Price established a position last quarter.  The market cap is a little under 39 million and the net liquidation figure from the company is sitting at a little over 46 million. I'm not going to get rich. But it looks like a reasonable place to park some cash. We'll see.

Thanks

Mark

[wjsco]

Yeah - that took far too long but I finally got my new GYRO for the old notes and the numbers worked out like I thought it would.

The play was to short it right after it went ex dividend around $12-$13 and stay short until now. $28 now = $2.53 then.

I did the first part but covered far too early and went long to boot to squander profits...

What an inefficient market due to mass confusion I suppose.

$28 doesn't look very interesting based on a NAV of $31.41. I can't imagine this management will get it liquidated in a timely manner.

 

It doesn't look interesting @ $28 because you only valued it based on a understated NAV.  Consider these two points: Management's bonus is setup to incentivized a fast liquidation but at the highest price possible.  Flowerfield is being rezoned.

There is a optionality in this stock with little downside.  If anyone knows a better stock with such characteristics please let me know b/c right now i'm hard pressed on good ideas.

 

So basically, when Stony Brook took the property for $25m, they valued it according to it's "light industrial" zoning designation. But, commercial real estate can be valued on "highest possible use," and GYRO argued that the property could and would be re-zoned, which would make it worth much more. To me, it looks like the courts watched Stony Brook try to rip off this little company, and they were not impressed. the courts imposed what, a 9.5% interest rate as a penalty? Just a bloodbath. But it's interesting because it was the optionality of re-zoning the property from light industrial to this other, better zoning designation that led the courts to agree that $125m was the correct valuation, not $25m like Stony Brook paid. And then GYRO got interest on top of that difference. But the point is, the property's valuation increased by a factor of 5 under the different zoning regime. Currently, the NAV of the flowerfields property is recorded as its value under it's historical zoning designation, e.g., because they haven't gotten the new zoning yet. The implication being, if they re-zone the property, it will be worth orders of magniture higher than its current carrying value. I don't know if it will go up by 5x, but in order for the courts to agree on a $125m valuation as opposed to an appraised $25m valuation...it's pretty clear that re-zoning is going to have a substantial impact on valuation of that real estate.

 

Second, on Cortlandt Manor - the town of Cortlandt just approved a Medical-oriented District (MOD) designation for GYRO's properties. And, a rehab facility company filed a lawsuit bc the town council put a temporary injunction on it's development of a site while the council evaluated this MOD concept. I think the rehab co was able to build the facility where it wanted to, but the implication was that future medical buildings would be forced to purchase from this particular area, or would be incentivized to, etc. And I've also been reading about an insane HC infrastructure build in Westchester Country over the past few years. So that would seem to be really well positioned. The asset value of these properties are also pre-MOD approval and pre-re-zoning (again, don't think they've actually re-zoned them yet).

 

And finally, the Grove is going to be a giant development. And Minto or whatever started breaking ground on the big road in sept of 2016. And they're going to start developing and selling houses in 2017, and as a 10% owner of the Grove LP, you'll participate in whatever the earnings are from selling plots of land. and this is carried at $0 on their balance sheet. and they're going to complete their liquidation by YE2018, which probably includes selling this interest back to the other Grove LPs or GP, etc. There are restrictions on how they can dispose of the asset, but I think it does have value and that they will monetize it...they even mention that distribution would start in 2017 - disclaimed with "if they happen," of course.

 

So basically all 3 of their major investments are recorded at discounts to their ultimate realizable value, and for each one i can point you to the reason why they're discounted and where that extra value is going to come from. if there's $10-15m upside btwn the 3 assets, and there could be more for sure, that's 17%-26% CAGR, if it takes until the end of 2018 to play out (1.75 yrs from now). If there's more upside in the asset values, or if theyre able to liquidate before YE 2018, that CAGR goes up. And, importantly, those returns should largely be totally uncorrelated to today's pretty whacky market, and are also tax efficient.