Bexil (BXLC) – Odd Lot Tender Offer – 12% Upside

Current Price – $11.8

Tender Consideration – $13.25

Upside – 12%

Expiration Date – August 9, 2018

Tender Announcement

This idea was shared by Neo.

 

Bexil Corp has launched tender offer to buy back 25,000 shares (~2.8% shares outstanding) at $13.25/share vs $11.8 current price. Due to small tender size the offer is likely to be oversubscribed. There is odd-lot priority for holders of 99 shares or less and then for holders of 499 shares or less. The company reserves the right to buy back up to another 2% of the shares outstanding.

BXLC stock liquidity is rather low (not trading on most days), however in 3 days after tender announcement already 13k shares changed hands. Thus is it quite possible that the tender will end up oversubscribed even at the 99 share bracket if BXLC share price remains below the tender price – only 250+ odd lot accounts are required for this to happen. Investors might have difficulty liquidating the position not accepted in the tender. Before announcement BXLC traded at c. $10/share.

There is no minimum acceptance clause and given the small size of the deal, financing is of no issue.

 

Additional Company Info

Bexil Corp main business is asset management for the DNI closed-end fund. BXLC main assets on the balance sheet are investment in the fund and holdings of other liquid securities and deposits.

Bexil is trading at a steep discount to its tangible book value of $18.5/share. Longer term track record can be seen in 2013 Annual report - book value per share (including intangibles) gradually declined from $43/share in 2008 to $17/share in 2015. Since then it has somewhat recovered. This track record does not inspire confidence (especially with a hindsight of the longest bull market) and probably explains why shares are trading at such a large discount to NAV.

30% of stock is owned by insiders and they do not intend to tender.

During 2017 company repurchased 93k shares at an average price of $7.8.

BXLC went dark  a decade ago, but its investor relations page is fairly informative.

9 COMMENTS

  1. sam.rosati

    dt, are you playing the odd-lot provision here? i’m also curious to hear what your best guess on the proration will be.

  2. Austin

    Still no cash for me (Interactive Brokers). Seems like it’s taking a long time?

  3. Jim Rivest

    The Bexil odd lots were prorated, so it looks like a little more than 25K shares were submitted as odd lots (99′ers). Those who bought and tendered 100-499 shares in the second priority got all of them returned.

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