Odd lot tenders

[walt373]

We could just post ideas here or into the Investment Ideas forum.

 

One currently going on is HLIT: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/tender-offer-harmonic-(hlit)/

[krazeenyc]

Best Odd Lot Tender I've participated in was NILSY -- that was the best.

[beerbaron]

Anybody had any luck doing arbitrage with Debentures or Notes? Where do I get information/quotes for such obscure securities?

 

http://www.sec.gov/Archives/edgar/data/1006240/000119312513217879/d537580dex99a1a.htm

 

BeerBaron

[Olmsted]

I've never tried.  As far as quotes, just type the CUSIP into FINRA and you can get a most-recent trade:

 

http://cxa.gtm.idmanagedsolutions.com/finra/BondCenter/AdvancedScreener.aspx

 

That can be very old info; and it won't give you a bid/ask, which can be real wide - or may not even exist.

[valueinvestingideas]

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?

 

SmallCap,

 

I run a website that covers investment opportunities in odd lot tenders, tender offers with odd lot provisions along with a few other special situations (reverse stock mergers,etc) at www.oddlotspecialsituations.com . This is exactly what you are looking for. If you have any questions you can shoot me an email at admin@oddlotspecialsituations.com . There are currently four active tender offers with odd lot provisions that I am following and one reverse stock merger. This is definitely an area where you can take advantage of great arbitrage returns due to being a small investor.

 

A few other tidbits: Interactive Brokers is probably the best broker for this because of no tender fees and cheap trades. One of the best odd lot trades yet was the PPG/GGC odd lot exchange this January. A ~$14k 99 share investment returned about ~20% in a week or two depending when you entered the trade.

 

[stahleyp]

Props to wknecht on this one. What do you guys think about this one? CSG

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/csg-chambers-street-properties/

 

 

[beerbaron]

Does anybody know any other countries where odd lot tenders are used. I started looking at France and it Tender Offer are really rare, yet alone odd lot priorities.

 

BeerBaron

[wachtwoord]

I have a very simple question: how many days before the closure of a tender offer do I need to purchase the stock? I have a margin account with Interactive Brokers so all my stock purchases appear in my holdings directly after I purchase them and are not subject to the 3 (?) day delay. If I buy a stock on Monday, what would be the first day I can make use of a legal tender offer? Or the other way around, say an offer closes on Friday, what would be the last day I can purchase the stock and still make use of the offer?

 

* I used Friday and Monday to take the weekend out of the equation

 

[Hielko]

That depends on the details of the tender offer, and specifically if shares can be tendered through a notice of guaranteed delivery.

[wachtwoord]

I like "that depends"-answers :)

 

Thanks for the wording: "notice of guaranteed delivery" I didn't know this had this meaning.

 

Specifically I was looking into  ANF: http://www.sec.gov/Archives/edgar/data/919808/000110465913040826/a13-10793_1ex99da1ii.htm  (which closes on June 10th)

 

Am I correct in interpreting the following (emphasis mine):

 

Stockholders whose certificates are not immediately available or who cannot deliver Shares and all other required documents to the Depositary prior to 11:59 p.m., New York time, on the Termination Date, or whose Shares cannot be delivered on a timely basis pursuant to the procedures for book-entry transfer prior to the Termination Date, may tender their Shares by or through any Eligible Institution by properly completing and duly executing and delivering a Notice of Guaranteed Delivery (or facsimile thereof), which must be received by the Depositary prior to the Termination Date, and by otherwise complying with the guaranteed delivery procedures set forth in Section 3, "Procedure for Tendering Shares," of the Fund's Issuer Tender Offer Statement. Pursuant to such procedures, the certificates for all physically tendered Shares, or confirmation of book-entry transfer, as the case may be, as well as a properly completed and duly executed Letter of Transmittal and all other documents required by this Letter of Transmittal must be received by the Depositary within three business days after receipt by the Depositary of such Notice of Guaranteed Delivery, all as provided in Section 3, "Procedure for Tendering Shares," of the Fund's Issuer Tender Offer Statement.

 

to mean I can buy the shares on Monday the 9th and still take part in this voluntary tender offer?

 

[Hielko]

Yes, that should be possible @ IB

[beerbaron]

to mean I can buy the shares on Monday the 9th and still take part in this voluntary tender offer?

 

Ask your broker how much time they take to process a corporate action. IB is 24h so I believe you are risking it.

 

I usually buy 5 days in advance with one of my broker and 3 days in advance with IB. Notice of guaranteed delivery can be used but you can't rely on the brokerage firm doing it, it's extra paperwork for them...

 

BeerBaron

[wachtwoord]

Thanks to the both of you!

 

I have created a ticket with IB asking for clarification :)

[wachtwoord]

Okay, as an update:

 

First off, I meant Monday the 10th in the previous post.

Second, even though the offer expires tonight, I was still able to buy shares and tender them today. This was the response from Interactive Brokers customer support:

 

There is a Guaranteed Delivery

The last day to purchase and tender is 2013-06-10

 

The deadline to tender shares to the offer will be 2013-06-10 @ 13:00 ET.

 

 

The Corporate Actions Tool is available for online elections.

 

Thanks for the help :)

[wachtwoord]

And because odd lot tendering got me interested (inefficiencies in markets are nice :) ) I searched and browsed some articles and came across a odd lot tender for a Russian stock called Norilsk Nickel in 2011 with a high share price and a high premium.  I thought it was a nice story so I'm sharing it here.

 

The shares traded at $210 at the time and the legal tender offer was $306 (note the ADRs were 10:1 to the ordinary stock and so 999 ADRs also counted as a odd lot). The total profit here was >31% on a total maximum investment of a little over $30k.

 

Link to the article: http://kiddynamitesworld.com/norilsk-nickel-russian-odd-lot-arbitrage-anatomy-of-a-trade/

[marodq]

And because odd lot tendering got me interested (inefficiencies in markets are nice :) ) I searched and browsed some articles and came across a odd lot tender for a Russian stock called Norilsk Nickel in 2011 with a high share price and a high premium.  I thought it was a nice story so I'm sharing it here.

 

The shares traded at $210 at the time and the legal tender offer was $306 (note the ADRs were 10:1 to the ordinary stock and so 999 ADRs also counted as a odd lot). The total profit here was >31% on a total maximum investment of a little over $30k.

 

Link to the article: http://kiddynamitesworld.com/norilsk-nickel-russian-odd-lot-arbitrage-anatomy-of-a-trade/

 

Sweet!

[valueinvestingideas]

I have a very simple question: how many days before the closure of a tender offer do I need to purchase the stock? I have a margin account with Interactive Brokers so all my stock purchases appear in my holdings directly after I purchase them and are not subject to the 3 (?) day delay. If I buy a stock on Monday, what would be the first day I can make use of a legal tender offer? Or the other way around, say an offer closes on Friday, what would be the last day I can purchase the stock and still make use of the offer?

 

* I used Friday and Monday to take the weekend out of the equation

 

I would give IB 24 hours to be 100% safe.

 

www.oddlotspecialsituations.com

[bobp]

Why do companies not set the record date prior to the announcement date so that it's passed when announced? I don't get it, although I guess very few people figure out the loophole.

[wachtwoord]

I have a very simple question: how many days before the closure of a tender offer do I need to purchase the stock? I have a margin account with Interactive Brokers so all my stock purchases appear in my holdings directly after I purchase them and are not subject to the 3 (?) day delay. If I buy a stock on Monday, what would be the first day I can make use of a legal tender offer? Or the other way around, say an offer closes on Friday, what would be the last day I can purchase the stock and still make use of the offer?

 

* I used Friday and Monday to take the weekend out of the equation

 

I would give IB 24 hours to be 100% safe.

 

www.oddlotspecialsituations.com

 

According to IB it usually takes half an hour. This time they set the deadline to 13:00 ET for a tender closing 23.59 ET so take that difference into account.

[jmoy911]

Aside from IB, are there any other discount brokers that don't charge a fee for tendering shares?

[writser]

I did look into this a while ago. I think OptionsExpress and OptionsHouse are also free, but only for US citizens. Got the list at home if you're interested.

[bookie71]

Charles Schwab doesn't charge if your account is of a certain size

[jmoy911]

Would appreciate that list if you still have it handy.

 

I did look into this a while ago. I think OptionsExpress and OptionsHouse are also free, but only for US citizens. Got the list at home if you're interested.

[Chris DeMuth Jr]

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. 

 

[abitofvalue]

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.

 

damn!

 

Thats a really good return and quite the set-up.

 

Too bad, I cant replicate such an idea as I have to have my brokerage account with a particular broker and every trade needs to get pre-approved.