With another month past us, all members are again invited to select the best special situation trade shared during the period.
Contest will be paused for the summer – I need to gather some feedback on this and contemplate how to improve it going forward. Feel free to reach out with any comments/suggestions. Member ideas will still be accepted and published on the site.
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 (13th of June).
Closed end fund is returning 40%-50% of capital to investors through tender offer and special distribution. Current discount to NAV stands at 6% and tender is for 32% of outstanding shares. Activists shareholders are expected to participate as well, thus tender is likely to be oversubscribed. Investors are also exposed to NAV fluctuations before the tender closes (scheduled for 19th of June).
Case for liquidation of former Dextera Surgical. Business has been sold and shares were trading significantly below conservative estimates of expected equity distributions. Liquidation is still ongoing and management is yet to announce their estimates for the distribution.
AVE is being acquired for cash consideration + earnout. The value of the earnount is driven by incremental EBITDA growth of AVE business over the upcoming year. Risk of transaction getting cancelled was very low and market was attaching almost no value to CVR. Acquisition is closing today and CVR valuation will be determined one year later.
Grenville is merging with another illiquid Canadian nano cap in an all share transaction. Merger arbitrage spread stood at 100%, however hedging was not possible and share prices were/are very volatile, thus final payoff will depend on acquirers share price after closing. Shareholders of both companies approved the deal and it will close in the coming days.
China’s shopping mall operator buying back 37% of the outstanding Hong Kong listed shares at 16% premium to market prices. Rationalle for repurchase is almost 100% spread between Hong Kong (H shares) and China (A shares) listings. Shareholder meeting to approve the tender will be held this week.
BH stock declined 30% following creation of dual class share structure as well as removal from the index. Underlying business performance remained unchanged. Corporate governance issues persist. Author is expecting company to start buying back own shares at these low prices, which might act as catalyst to propel the share price upwards. Historically BH share price reacted positively to the start of repurchases.
Large cap merger case. DPS is being acquired/merged in cash + equity of new company transaction. Payoff from the trade is entirely driven by the valuation of the to-be-received equity stub, which will be combination of current DPS business and currently private coffee company (beans, drinks and appliances). Peer comparison indicates market is currently undervaluing the equity stub.
RMGN is being acquired by its chairman at 6% premium to current market prices. RMGN is a failed turnaround case and business continues to decline. Acquisition is subject to shareholder vote, which will mostly be determined by the vote of the largest shareholder who is likely to have been kept in the loop and agreed with the transaction. Go-shop period ended with another potential proposal to recapitalize the company instead of cash out of unaffiliated shareholders.
Australian listed company is being acquired by the Japan listed one in an all stock transaction. Shareholders of less than 20k shares can opt to receive cash instead. Cash consideration is 13% above current Mitula share prices. Cash option is likely to be available to record shareholders only.