Odd lot tenders

[matjone]

Does ameritrade charge any monthly/annual fees on those accounts?

[compoundinglife]

A lot of busywork haha. Some were like advisor accounts and some individual but I put my real name and info for all of them.

 

I agree on the busywork... I think that I have like 25 personal accounts through TDAmeritrade for this stuff. I honestly can't remember now. You buy shares in 1, then split them up into all the others (for free) and save a boatload on commissions (and worries about executions).

 

Wow I thought I had a lot of accounts, you guys have be beat by a mile.

[infinitee00]

Walt/Ragnar

 

This is very interesting. I didn't have a clue this could be done or if it's even legal to do so :).

 

I am curious, how did you guys open so many personal accounts under one name ( I mean isn't every account linked to same SSN that will prevent having multiple accounts) or are these some sort of sub-accounts? If it's a sub account doesn't it mean that during an odd lot tender, it gets counted as a single account and one has to rely on the brokerage turning a blind eye to this ?

 

Were there any differences between these accounts e.g. cash vs margin or forex/commodities etc?

 

Do you get charged a commission/fee separately for each account?

 

Is each account separately insured up to $500K by SIPC or does the 500K apply to the total amount held by that investor/customer in all accounts?

 

Has anyone tried to break a large 'all-or-none' trade into smaller number of 'all-or-none' trades using multiple accounts/sub-accounts ( I am mostly interested in multiple accounts because of this)?

 

 

 

 

 

[compoundinglife]

Walt/Ragnar

 

This is very interesting. I didn't have a clue this could be done or if it's even legal to do so :).

 

I am curious, how did you guys open so many personal accounts under one name ( I mean isn't every account linked to same SSN that will prevent having multiple accounts) or are these some sort of sub-accounts? If it's a sub account doesn't it mean that during an odd lot tender, it gets counted as a single account and one has to rely on the brokerage turning a blind eye to this ?

 

Were there any differences between these accounts e.g. cash vs margin or forex/commodities etc?

 

Do you get charged a commission/fee separately for each account?

 

Is each account separately insured up to $500K by SIPC or does the 500K apply to the total amount held by that investor/customer in all accounts?

 

Has anyone tried to break a large 'all-or-none' trade into smaller number of 'all-or-none' trades using multiple accounts/sub-accounts ( I am mostly interested in multiple accounts because of this)?

 

You can open multiple taxable accounts at probably any brokerage. I did it just by stopping by my local branch and asking to open an additional account. I believe in the case of odd lot tenders it works because they are different account #s and the stock is registered to the "street name" or the brokerage's name so the company doing the tender does not know it is the same party. You can ask to have the stock specifically registered to you in which case this might not work.

 

I think the multiple accounts even at different brokerages probably violate the terms of most odd lot tenders so this might not be above board. But I have tried it before with multiple accounts in the same brokerage and it did work.

[ragnarisapirate]

Walt/Ragnar

 

This is very interesting. I didn't have a clue this could be done or if it's even legal to do so :).

 

I am curious, how did you guys open so many personal accounts under one name ( I mean isn't every account linked to same SSN that will prevent having multiple accounts) or are these some sort of sub-accounts? If it's a sub account doesn't it mean that during an odd lot tender, it gets counted as a single account and one has to rely on the brokerage turning a blind eye to this ?

 

Were there any differences between these accounts e.g. cash vs margin or forex/commodities etc?

 

Do you get charged a commission/fee separately for each account?

 

Is each account separately insured up to $500K by SIPC or does the 500K apply to the total amount held by that investor/customer in all accounts?

 

Has anyone tried to break a large 'all-or-none' trade into smaller number of 'all-or-none' trades using multiple accounts/sub-accounts ( I am mostly interested in multiple accounts because of this)?

 

If I answer all the questions for you, then the answers will be worth less (please note the difference between "worthless" and "worth less") to you. :)

 

I will add that this has worked for me in the past and that to my and my national broker's knowledge, there is nothing illegal or immoral about any of it. I and anyone else that does this (even in 1 acct) are simply playing by the rules that the companies set in their own tender offers and reverse forward share splits. If anything, I would argue that we are helping them retire shares at an undervalued price- everyone I have participated in, there would have been substantial value created by a buyback. If the company isn't wanting to buy back a ton of shares, then they could always treat shares that are in street name as 1 block (which, as I pointed out, has happened to me before with a NOL cash box), thus getting around people breaking the shares up into multiple accounts.

 

It should be noted that there can be a substantial amount of risk involved with these. Sometimes, they don't happen at the price they should have, don't happen at all, or, shares are treated differently than you think they might be. Sincerely, I can't stress enough to do your homework on these deals!

[matjone]

Ragnar, and anyone else who has experience with these - including your losers, what would you estimate your annuallized returns from these things have been?

 

Second question, if you feel like answering it, what have you found to be the  pitfalls associated with these?

[ragnarisapirate]

Ragnar, and anyone else who has experience with these - including your losers, what would you estimate your annuallized returns from these things have been?

 

Second question, if you feel like answering it, what have you found to be the  pitfalls associated with these?

 

I never sat down and figured it out, but, I would think that 30%+ annualized of deployed capital could, on average, be pretty reasonable (say, a 10% value gap that takes 4 months to play out). They are getting harder to do though, as there aren't nearly as many around, as a whole- the arb gaps seem to be smaller, and there have been a few that I have not done because I wasn't convinced they would go through. If they need a vote, that's one thing. They also need a glut of cash, in case there are a lot of shares to be bought. There is also the instance in which it just doesn't happen at the price that it was supposed to, or the deal just doesn't happen. That's a BIG risk. Sometimes, these take months to happen as well, which can kill returns- I sat on one for maybe 6 months?

 

I will only do these deals if I wouldn't mind holding the shares in the event that the deal DOESN'T happen. Then again, I may be conservative on them. For me, I try to only buy the ones that I really like everything about- including the company, so if I get stuck with the shares I wouldn't mind- as such, I have only had one deal not work out (the previously mentioned one where they treated street name shares the same)- I can't remember if I lost or made money on it (because I think the price went up?), but I know that it was only about $30 bucks in either direction- That one was a while ago, and would of worked had I gotten a certificate for the shares.

 

You need to do a lot of reading on these to make sure you are right, because if you don't, you could quite literally be picking up pennies in front of a steam roller.

 

I bet that in the next recession there will be a ton more of these deals to do.

 

Kent Financial had a really cool one that happened, I want to say- like a year ago? But the market was SUPER efficient on the price and there weren't a whole lot of shares that got traded before it was bid up (literally, by noon the day it was announced.) I have also seen instances in which they made the announcement after market close, and made the record date for the transaction that morning.

[infinitee00]

Thanks Ragnar and compoundinglife. The answers were very helpful and definitely not "worth less" as I was totally unaware of this.

 

After posting this message I actually did a google search and found out that a lot of forex traders use this strategy to get over lot limits from their brokers. So I guess it's not that uncommon although I couldn't find anything for odd lot tenders. Good to be aware of it though even if I don't plan to use it for the upcoming odd lot tenders.

 

 

 

[walt373]

Ragnar, I might set up some TD accounts since my IB accounts got closed. Do you know if TD charges a commission for corp actions, and how do you tell them you want to do the tenders? Do you just email them and list all 25 of your accounts?

[Hielko]

Think TD has a $30 fee...

[walt373]

ew...

[infinitee00]

I checked the fees for TD, Fidelity and Schwab and all of them have a $38/$39 fee for "voluntary reorganizations" which include tender offers.

 

I guess I will stick to my IB account for tender offers unless of course the fee is small fraction of the profit.

[Guest wellmont]

Think TD has a $30 fee...

 

if you meet a certain minimum asset level there is no fee. I believe it's 150k in combined assets.

[LC]

I checked the fees for TD, Fidelity and Schwab and all of them have a $38/$39 fee for "voluntary reorganizations" which include tender offers.

 

I guess I will stick to my IB account for tender offers unless of course the fee is small fraction of the profit.

Do you know what IB charges? I'm in the process of migrating my accounts over.

[bookie71]

I don't know the minimum size at Schwab is,but there is no charge.

[infinitee00]

@lc

 

IB does not charge for tender offers

 

@bookie

 

Are you sure about that? I found that $39 fee in one of their fee documents. Let me see if I can find it again

[walt373]

IB does charge $10/month minimum in commissions though... meaning if you don't spend $10 per month in commissions they will charge you the difference.

[writser]

Think TD has a $30 fee...

 

if you meet a certain minimum asset level there is no fee. I believe it's 150k in combined assets.

 

Yeah but no point then in opening a small account just to do the odd lot offers.

[Olmsted]

I checked the fees for TD, Fidelity and Schwab and all of them have a $38/$39 fee for "voluntary reorganizations" which include tender offers.

 

I guess I will stick to my IB account for tender offers unless of course the fee is small fraction of the profit.

Do you know what IB charges? I'm in the process of migrating my accounts over.

 

Fidelity doesn't charge a fee if you have enough money with them (the threshold is only 2 or 300k).  Also, in any brokerage account, if you want to do these and there is a fee, just say "jeez, $38 fee for such a small position, seems high.  Would you mind waiving it as a courtesy?  By the way, Interactive Brokers does this for free."  You will never be turned down.

 

I like odd-lot tenders, but have a minimum % and $ threshold to keep me from getting too little return on my time investment.

[oddballstocks]

I checked the fees for TD, Fidelity and Schwab and all of them have a $38/$39 fee for "voluntary reorganizations" which include tender offers.

 

I guess I will stick to my IB account for tender offers unless of course the fee is small fraction of the profit.

Do you know what IB charges? I'm in the process of migrating my accounts over.

 

Fidelity doesn't charge a fee if you have enough money with them (the threshold is only 2 or 300k).  Also, in any brokerage account, if you want to do these and there is a fee, just say "jeez, $38 fee for such a small position, seems high.  Would you mind waiving it as a courtesy?  By the way, Interactive Brokers does this for free."  You will never be turned down.

 

I like odd-lot tenders, but have a minimum % and $ threshold to keep me from getting too little return on my time investment.

 

I've never been charged a fee at Fidelity even though they claim to have one, and have told me what the fee is on the phone, it's never been charged.  Maybe it's an AUM thing, not sure. 

 

I recently requested a stock in certificate form, was told there was a $250 fee, never charged.  I don't mind paying an extra 5-10 EUR to trade when I can get corporate actions for free.

[SmallCap]

I have done a few of these transactions and everyone of them has been very profitable to me on a Annualized ROI basis. I haven't yet gotten stuck with any of them. But finding them and reading through all of the details can be tedious. I for one would be willing to pay someone else for the privilege of piggybacking on their research. This is a situation where the downside isn't very bad and I would be willing to invest alongside of someone without doing research myself.

 

Any takers on this?

[LC]

I have done a few of these transactions and everyone of them has been very profitable to me on a Annualized ROI basis. I haven't yet gotten stuck with any of them. But finding them and reading through all of the details can be tedious. I for one would be willing to pay someone else for the privilege of piggybacking on their research. This is a situation where the downside isn't very bad and I would be willing to invest alongside of someone without doing research myself.

 

Any takers on this?

Not a bad idea. What % of profits (or flat fee) seems fair to part with?

[rmitz]

I have done a few of these transactions and everyone of them has been very profitable to me on a Annualized ROI basis. I haven't yet gotten stuck with any of them. But finding them and reading through all of the details can be tedious. I for one would be willing to pay someone else for the privilege of piggybacking on their research. This is a situation where the downside isn't very bad and I would be willing to invest alongside of someone without doing research myself.

 

Any takers on this?

Not a bad idea. What % of profits (or flat fee) seems fair to part with?

 

% of profits would seem to be completely on the honor system, so I'm not sure that's workable.  A flat fee would probably depend on the expected # of opportunities.  A fee per recommendation? You can sort of price it by the then expected profits, but there's guesswork in that.

[SmallCap]

I think a flat fee for following or a flat fee per opportunity.

 

I wonder what would happen if someone on the board simply posted an opportunity that they fully researched with all the particulars spelled out. Tagged it as an odd lot tender and provided either their paypal linked EMail address or their favorite charity and see what happens.

 

I am guessing that a number on the board would take advantage of it and would send some cash their way, I know I would.

[oddballstocks]

I have done a few of these transactions and everyone of them has been very profitable to me on a Annualized ROI basis. I haven't yet gotten stuck with any of them. But finding them and reading through all of the details can be tedious. I for one would be willing to pay someone else for the privilege of piggybacking on their research. This is a situation where the downside isn't very bad and I would be willing to invest alongside of someone without doing research myself.

 

Any takers on this?

 

I believe George at FatPitchFinancials.com did this for a while, it was $200 a year maybe.  He didn't really keep up with it so the resource has gone mostly dry.

 

I get the feeling there's a market for this product but probably not a large one.  Most investors are individuals, and while $200 isn't expensive that's really the profit from one or two of these things.