Vote for Member Idea of the Month – April Edition

Thanks again to all members who have shared special situation opportunities. There have been 6 ideas submitted during April and so far all of them are still pending.

Please select one the trades below to cast your vote. The winner(s) will be awarded $1,000. All ideas are listed in the order they have been submitted. 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 next Wednesday (9th of May).

 

Liberty SiriusXM (LSXMK) – 1% return so far – Pending

A bet on discount mean reversion between SIRI and the tracking stock. Historically tracking stock has traded at 20% discount and recently the spread has widened to 30% due to factors unrelated to the company. So far the wide discount persist.

 

General Growth Properties (GGP) - 3% loss so far - Pending

Stock and cash merger arbitrage between General Growth Properties and Brookfield Property Partners with 7.5% spread at the time of posting. BPY already owns 34% of GGP and is buying the remaining stake. The spread has widened from 7.6% to 10.6%.

 

Willbros Group (WGRP) - 1.5% return so far - Pending

Microcap all cash merger arbitrage with 7% spread. Main shareholder as well as insiders have already agreed to support the merger. Approval from remaining shareholders is still pending (no date set yet), however WGRP would likely file for bankruptcy in the absence of merger, so their approval is quite likely.

 

US Cobalt (USCO.V) - 1% loss so far – Pending

Microcap all stock merger between junior exploration companies with 22% spread. Shareholder and regulatory approvals are still pending. Limited / no borrow available for short leg of the trade.

 

China New Borun (BORN) – 4% loss so far – Pending

Going private transaction with controlling shareholder / chairman / CEO willing to buy out the remaining shareholders (non-binding proposal) at 30% premium to market prices. Company is located in China. BORN is profitable and trades below it’s cash balance. Company recently changed auditors and is delaying filling of the annual report.

 

Reckon (RKN.AX) – 4% return so far - Pending

Business division is to be sold for a price equivalent to current enterprise value meaning that investors would be receiving the remaining business (half of current revenues) for free. Regulatory approval of the division sale seems to be the key obstacle as regulators already expressed preliminary skepticism on the transaction.

 

Published on: May 2, 2018  •  Published by:
Category: Contest  •  Updates

1 COMMENT

  1. dt

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

    A total of 6 special situation write-ups have been submitted for the April contest – and all of the transactions are still pending. Majority of member votes were again split between two opportunities – Reckon business sale (shared by Hugh) and General Growth Properties merger arbitrage (shared by Michael), with former taking a slight lead. Congratulations to both!

    As during the last month 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 cast their votes.

    May contest to win $1,000 is now on, and we already have 4 submissions. So please share any interesting special situation trades you have up your sleeve.

    April Winners:

    Reckon (RKN.AX) – Business Sale – 40% upside

    Business division is to be sold for a price equivalent to current enterprise value meaning that investors would be receiving the remaining business (half of current revenues) for free. Regulatory approval of the division sale seems to be the key obstacle as regulators already expressed preliminary skepticism on the transaction. Info from regulators is expected by the end of May / beginning of June.

    General Growth Properties (GGP) – Merger Arbitrage – 7.6% upside

    Stock and cash merger arbitrage between General Growth Properties and Brookfield Property Partners with 7.5% spread at the time of posting. BPY already owns 34% of GGP and is buying the remaining stake. The spread still stands at 7%.

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