Odd lot tenders

[hyten1]

DAMN! chris

 

man i need to think about this strategy of yours and see what capacity will i be able to carry it out.

 

thanks for the idea/inspiration

 

hy

 

The Edgar alert for SEC filings regarding reverse stock splits is the SC 13E3.  Additionally, for the sake of some redundancy, I have a Google Alert for "tender offer" and “repurchase”.  To scale this type of opportunity, the best tactic was to participate across accounts.  In my experience, in addition to your own account, a family of four can set up accounts in at least twenty-five separate entities between individual accounts, trusts, and so forth.  In the case of NILSY, such a strategy raised one’s upside from about $10k to over $250k. Happily, the process was smooth and quick and Norilsk Nickel paid as per their offer.

 

What if you have children or entities without the requisite capital to execute this investment, which in this case demanded $20k each? One solution is to have separate accounts set up for each and to lend them the money at the AFR (http://1.usa.gov/UZ7Rc3 ).  That rate is currently 0.25%. At the time it was 0.16%. So, the math works like this: for each of twenty-five entities loan $20k, charge $32 in interest, invest $20k, collect $30,600 in cash from Norilsk, have the debtor pay off the $20,032 loan with the proceeds. They keep the $10,568 profit. You gain $800 in interest in addition to the $10,600 in your own account for a gain of $11,400 and various beneficiaries and related parties within your group gain an additional $264,200. Total original invested capital was $520,000. Total time elapsed was one month. Total profit was $275,600.

 

In terms of multiple accounts, different people will structure things in different ways.  Here is one strategy for getting to twenty-five accounts: 

 

1. CD (my individual account)

2. ETD (my wife’s)

3. C3 (my son’s)

4. EC (my daughter’s)

5. CD IRA (my children have no IRAs; they will start earning allowance incomes at age 5; hard to justify paying them enough before then)

6. ETD IRA (I employ her)

7. CD+ETD partnership

8. C3+EC partnership

9. CD+C3 partnership

10. CD+EC partnership

11. ETD+C3 partnership

12. ETD+EC partnership

13. CCD, C3 + EC partnership

14. ETD, C3 + EC partnership

15. CD, ETD, + C3 partnership

16. CD, ETD, + EC partnership

17. CD trust

18. ETD trust

19. C3 trust

20. EC trust

21. CD+ETD trust

22. C3+EC trust

23. ETD+C3 trust

24. ETD+EC trust

25. LLC that manages real estate

 

I set these up with a master-feeder structure so that I can trade once on their behalf.  Also, several of these but not all are limited partners in my general investment vehicle, Rangeley Capital.

[jmoy911]

I have a google alerts running for tender offers and I'll notice a tender offer for bonds from time to time (i.e. http://pr-bg.com/content/view/20159/80/). Does anyone have any experience with tender offers relating to bonds? How do they work when compared to tender offers for stocks? Are there any opportunities/does it ever make sense?

[LC]

Not to state the obvious but if they're offering to tender for "any and all notes" at $1,067/note and you can buy them for an adequate discount...seems relatively simple to me to notify your broker of your intention.

[beerbaron]

I have a google alerts running for tender offers and I'll notice a tender offer for bonds from time to time (i.e. http://pr-bg.com/content/view/20159/80/). Does anyone have any experience with tender offers relating to bonds? How do they work when compared to tender offers for stocks? Are there any opportunities/does it ever make sense?

 

Getting your hands on the notes is another story. I have yet found a tender with notes easily available.

 

BeerBarib

[beerbaron]

I heard a bird talking about mutuals going public... I tough those birds were extinguished. Can anybody bring the Dodo back to life and update me on the latest stories?

 

BeerBaron

[jmoy911]

Thanks for the response Beerbaron, I realize I didn't word my question correctly but you manage to figure it out anyway.

 

I have a google alerts running for tender offers and I'll notice a tender offer for bonds from time to time (i.e. http://pr-bg.com/content/view/20159/80/). Does anyone have any experience with tender offers relating to bonds? How do they work when compared to tender offers for stocks? Are there any opportunities/does it ever make sense?

 

Getting your hands on the notes is another story. I have yet found a tender with notes easily available.

 

BeerBarib

[wachtwoord]

Damn it! I missed another tender offer ...

 

WebMD Health Corp expired September 10th. This is leaving easy money on the table. Can anyone explain how I make alerts for this? I want to avoid this happening again.

[Hielko]

This wasn't easy money imo because it seemed probably that you could get hit with high withholding taxes (as a foreign investor).

[matjone]

I have set up an rss feed for SC TO filings.  I also have a google alert set up for "tender offer" and a few others.  Or you could just hop on sec.gov everyday and run through all the schedule TO filings.

[beerbaron]

Just go trough every new filings every week and you'll catch them all.

 

BeerBaron

[wachtwoord]

Maybe I'm an idiot but I have found no way to use Edgar (sec.gov) to find these things. Thus far I have relied on searching trough finance.yahoo.com for "tender offer". How do I search Edgar for these things?

[netnet]

 

i have not used this service, and can not vouch for it,  but there is that guy who tracks these things for a fee who posted earlier. 

[valueinvestingideas]

 

i have not used this service, and can not vouch for it,  but there is that guy who tracks these things for a fee who posted earlier.

 

For anyone interested, yes I am still actively researching these opportunities at http://oddlotspecialsituations.com/ and there are two active ones right now

[abitofvalue]

any thoughts on YONG?  Not an odd-lot deal but seems to be trading at a discount to an announced merger (with committed financing)

[no_free_lunch]

It is an interesting one, never heard of it before though.  It is a chinese listing though right?  I think there is an additional discount for that reason.  How do you know that the whole deal isn't a sham?  Not to slam the idea, it looks like it's a 6.5% gain in 2 or 3 months which is great, just trying to point out the downside.

 

If you look in canada the smaller companies will often go for 4-5% below their acquisition price several months prior.  It is just that if you buy enough of these, on some of them the deal will fall through.  The stock can then trade back down to pre-acquisition price (or lower) and you can give everything back from numerous arbs.  Not saying it's not a great strategy, but there are still risks that need to be considered.

[matjone]

I still look at these a little but I think there are better uses of my time.  I looked at probably a hundred of them and invested in one.  I think if I added up all the time I spent looking at these I could have made more money working at McDonald's.

 

The problem with learning this stuff is it doesn't scale.  You can make money, but I think your time is better spent reading annual reports and familiarizing yourself with companies. You'll lose out on a few pennies but the knowledge you build will probably make you a lot more money in the long run, and it's more enjoyable.

[beerbaron]

I still look at these a little but I think there are better uses of my time.  I looked at probably a hundred of them and invested in one.  I think if I added up all the time I spent looking at these I could have made more money working at McDonald's.

 

The problem with learning this stuff is it doesn't scale.  You can make money, but I think your time is better spent reading annual reports and familiarizing yourself with companies. You'll lose out on a few pennies but the knowledge you build will probably make you a lot more money in the long run, and it's more enjoyable.

 

I don't understand, it takes about 10 minutes per week to go trough all the tender offer. A search of "odd" in the filing brings you the answer you are looking for. I figure that I earn about 100$ an hour doing this, not the best return on my time but pretty good.

 

BeerBaron

[LC]

Also if you have it go directly to a RSS feed you can pretty much ignore the amended tender offer filings...

[ItsAValueTrap]

any thoughts on YONG?  Not an odd-lot deal but seems to be trading at a discount to an announced merger (with committed financing)

 

There are people shorting the stock because they think it is a fraud (I am short YONG).

 

Here is one analysis of the company (short):

http://absaroka.com/wp-content/uploads/2012/12/YONG.ResearchReport.051811-vFINAL.pdf

 

Yongye even put up a FAQ here:

http://www.yongyeintl.com/FAQ.html

In my opinion, Yongye's answers don't make a lot of sense.  For question #27, the fertilizer molecules are the same between different manufacturers.  Yongye doesn't say how their product is "higher quality" than competitor's.

 

The product itself doesn't seem to make that much sense to me.  Usually commercial fertilizer products don't look like that.

[wachtwoord]

Columbia Property trust, range $22-$25 (Dutch Auction, with odd lot provision), current price $22.52, deadline Friday. http://finance.yahoo.com/q?s=CXP

 

I don't think I'll buy unless the price drops below $22. I find it difficult to quickly value CXP and I have yet to see a Dutch auction result in another result than the lowest price . Anyone else with experience?

[Hielko]

any thoughts on YONG?  Not an odd-lot deal but seems to be trading at a discount to an announced merger (with committed financing)

 

There are people shorting the stock because they think it is a fraud (I am short YONG).

 

Here is one analysis of the company (short):

http://absaroka.com/wp-content/uploads/2012/12/YONG.ResearchReport.051811-vFINAL.pdf

 

Yongye even put up a FAQ here:

http://www.yongyeintl.com/FAQ.html

In my opinion, Yongye's answers don't make a lot of sense.  For question #27, the fertilizer molecules are the same between different manufacturers.  Yongye doesn't say how their product is "higher quality" than competitor's.

 

The product itself doesn't seem to make that much sense to me.  Usually commercial fertilizer products don't look like that.

I share your concerns, and while I do invest in Chinese going private transactions i'm staying away from Yongye. On the other hand I'm not so sure that I like the other side of the trade. You also see very sketchy Chinese companies that go private without problems, and it's also not that your downside risk is limited to the small spread since deal prices can be increased upwards. Sometimes it's just too though imo.

[writser]

Re CXP: I'm in for a couple of shares. Downside ~50 cts, upside unlimited (barring exceptional circumstances ;) ), either in the open market or in the tender.  Also, I've seen regularly that tenders such as these end up in the higher end of the range. I think it's a bit of game theory; if everybody thinks the same way as you do (which is likely at these prices) the tender will go through at a higher price. So I just bit the bullet.

[wachtwoord]

Re CXP: I'm in for a couple of shares. Downside ~50 cts, upside unlimited (barring exceptional circumstances ;) ), either in the open market or in the tender.  Also, I've seen regularly that tenders such as these end up in the higher end of the range. I think it's a bit of game theory; if everybody thinks the same way as you do (which is likely at these prices) the tender will go through at a higher price. So I just bit the bullet.

 

Fair points, but isn't the upside limited to $25 as this week you need to tender them and withdrawing them after isn't possible? Also, at what price point to put in the tender? If you do $22.50, the tender goes through at $22 and at the same time the stock collapses below $22.50 you lost more.

 

Thanks for responding anyway, I was fishing for opinions :)

 

 

[Guest wellmont]

polycom was one of the very few that i've done that did not go at the top of the range. not sure what it means.

[writser]

On the first point: I bought them a couple of weeks ago, either I can tender or sell them open market if the stock moves up. So potentially more upside. But I agree that the chances of that still happening now are slim :) On the second point: that's why the odd-lot provision is so great, the day before expiration I can either sell in the market or tender at $22 and I am rid of my complete position. If you have a larger stake you do not have that downside protection; you get pro-rata execution and what happens often is that the stock crashes right after the tender offer as all the arbitrageurs sell their positions.