Vote for Member Idea of the Month ($1,000 Prize)

Huge thanks to all the members who have shared their special situation ideas. Looking forward to hearing more interesting trades from you. And now it is time to determine the best member idea for March.

Please select one the ideas listed below and cast for vote. The winner(s) will be awarded $1,000. All ideas are listed in the order they have been submitted. Below I am also sharing quick overview of each.

Only members will determine the winner(s). Selection cannot be changed after submission. One vote per member. Poll will close on Saturday (7th of April).

 

Herbalife (HLF) – 1.9% return so far – Pending

Expectation of tender offer to buyback 5%-7% of outstanding stock. Tender has not been launched yet and pricing is still unclear.

 

Lithium X Energy (LIX.CVE) – 19% return – Completed

This opportunity appeared because of temporary concerns regarding completion of LIX acquisition (financing issues) even though LIX management ensured acquisition is still on track to be completed in two days. Just one day later these concerns have been lifted and the spread narrowed significantly.

 

Pure Industrial Real Estate Trust (AAR-UN.TO) – 1% return so far – Almost Complete

Low risk merger arbitrage with Blackstone. Merger is progressing as expected and spread has been almost fully closed by now.

 

Stanley Furniture (STLY) – 0% return - Failed

This was a bet on share price rebound after the notice of upcoming delisting was issued, likely forcing some of the shareholders to liquidate their positions. Delisting took place 3 week ago but so far the price has failed to return to pre-announcement levels. Stock is illiquid and volatile.

 

Pershing Square (PSH.AMS) – 5% loss so far – Pending

Expectation of favorable pricing in the tender offer to buy back 10% of outstanding shares. PSH trades at historically wide discount relative to NAV and tender offer is likely to be priced at narrower discount (in line with recently made offer). Tender details will be announced after shareholder meeting (scheduled for 24th of April).

 

Kennady Diamonds (KDI.CVE) – 0% return so far – Pending

Junior diamond explorer merger arbitrage (all stock) with 7% spread. Shareholder votes of both companies are set for 9th of April. ISS and Glass Lewis issued recommendations that shareholders vote for the merger.

 

Ladbrokes Coral (LCL.L) - 5% loss so far – Pending

Merger arbitrage (stock, cash and CVR) situation that resulted in free CVR. Merger has been closed but the value of CVR remains unclear and will be determined internally based on EBITDA impact from the new betting terminal regulation in UK. The regulatory ruling turned out to be more favorable than was rumored. The indicated loss is from the decline in acquirer’s (GVC.L) share price – 0% loss if position was hedged.

 

Billabong (BBG.ASX) – 9% return – Almost Complete

Merger Arbitrage situation involving Oaktree in Australia where the biggest risk was shareholder approval. Couple activists have been pushing for a better price and eventually got 5% bump in the offer price. Spread has been almost eliminated and transaction will close on the 9th of April.

Published on: April 4, 2018  •  Published by:
Category: Updates

2 COMMENTS

  1. dt

    The first iteration of the monthly contest to win $1,000 is over and I am happy to announce the winners.

    A total of 8 special situation write-ups have been submitted for the March contest. Majority of member votes were for the two merger arbitrage cases – Lithium X Energy (19% return, by Vladimir) and Billabong (9% return, by Matt), with former taking a slight lead. Details on both cases are below.

    The price pool will be split $600 and $400 between the two. I will contact authors to arrange the payments.

    Thank you for all who have shared their write-ups, contributed in discussions and casted their votes. Participation in voting could have been more active and hopefully this will improve going forward.

    April contest to win $1,000 is now on, so please share any interesting special situation trades you have up your sleeve.

    March Winners:

    Lithium X Energy (LIX.CVE) – Merger Arbitrage – 19% return

    This opportunity appeared because of temporary concerns regarding completion of LIX acquisition (financing issues) even though LIX management ensured acquisition is still on track to be completed in two days. Just one day later these concerns have been lifted and the spread narrowed significantly. Merger was closed a week later.

    Billabong (BBG.ASX) – Merger Abitrage – 9% return

    Merger Arbitrage situation involving Oaktree in Australia where the biggest risk was shareholder approval. Couple activists have been pushing for a better price and eventually got 5% bump in the offer price. Transaction closed on the 9th of April.

  2. Joe Hill

    Congrats to the winners and all who contributed!

    Curious (if anyone cares to share) what is your screening process for finding merger arbs, odd lots, forced selling, and any other special situations.

    Thank you in advance!

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