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We focus on special situation investment and risk arbitrage ideas with short term catalysts. We cover merger arbitrage, tender offer, spin-offs, split-offs, liquidations, bankruptcies, going private transactions, rights offerings and many other types of situations. High quality research is shared for each case with valuable insights from member investors.

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NEW FEATURE – MEMBER IDEAS

First a short foreword. Quite a few of you have shared investment ideas with me, but only a part of them ended up on the site. This was either do to lack of time to investigate them thoroughly or due to my belief that upside was not worth the risk. So usually if I did not take the position, I did not share that idea with the rest of community. Which is a pity, because some of these ideas actually

 

2017 Year in Review – Quick STATS

It was a very interesting year for Special Situation Investments. In total there have been 38 investment ideas posted during the year and members added a further 12 in the new ‘Member Idea’ section. By luck or skill the performance has been great – only two trades ended in losses and the rest averaged 15% returns. Scope continued to widen and only 10 out of 38 investment opportunities were odd-lots.

     

Tanker Investments (TIL:OMXNO) – Merger Arbitrage – 6% upside

Current Price – NOK 43.2

Expected Payout – NOK 45.65

Upside – 6%

Expiration Date – Q3 2017

Teekay Tankers (TNK) entered into definitive agreement to buy Tanker Investments (TIL). Each TIL share would be exchanged to 3.3 TNK shares – representing 6% spread at current prices and NOK/USD exchange rate. Merger has been approved by the boards of both companies as well as Special Committee of TIL independent directors. Shareholder approvals on both sides are still pending. Merger is expected to close



MVC Capital (MVC) – Expected Tender Offer – 5%+ upside

Current Price – $10.51

Expected Payout – TBD

Upside – TBD (likely around 5%+)

Expiration Date – TBD

The BoD of MVC Capital approved tender offer to repurchase $25m of stock (approximately 11% of outstanding). Tender is expected to commence in November and the repurchase price has not been set yet. On top of that on the 31st of October shareholders will vote whether to adopt activist proposal to increase the return of cash to shareholders. If approved this will likely give a further boost to the



ZAIS Group (ZAIS) – Going Private – 23% upside

Current Price – $3.25

Acquisition Price – $4.00

Upside – 23%

Expiration Date – TBD

This is a microcap arbitrage opportunity  that was suggested by one of the members (thank you Ivan). CEO is willing to take this failed SPAC private at 23% premium to current share price.



Greenhill & Co (GHL) – Odd Lot Tender Offer – 1.5% upside (12% realized)

Current Price – $17.02

Offer Price – $17.25

Upside – 1.5% or $25 for odd lot holders

Expiration Date – 25th of October, 2017

GHL has launched tender for 40% of the outstanding stock. This is an opportunity to participate in the tender  that is very likely to be under-subscribed and price might shot up if that turns out to be the case. More risk averse investors can pocket $25 risk free.



Advanced Emissions Solutions (ADES) – Tender Offer + Expected Dividend – 20%+ upside

Current Price –$9.85

Expected Price - $12

Upside – 20%+

Expiration Date - June 2017

This is a two part special situation. The first one is a simple dutch tender with odd-lot provision. The second part comes from general undervaluation of the company where expected dividend (yet to be announced, but already communicated by management) could serve as a catalyst. At the same time the company is trading below contractually secured cashflows in the RC segment and has significant upside optionality from other business segments.



Reaves Utility Income Fund (UTG) – Mean Reversion – 5% upside

Current Price – $31.5

Expected Payout – $33.4

Upside – 5%

Expiration Date – 4th of October 2017

UTG is closed-end fund investing in utility sector. The fund issued transferable rights to subscribe to new common shares. For every three rights held, a holder of rights may buy one new common share of the Fund at 5% discount to 5 day average closing prices preceding the expiration date (October 4th). This created an arbitrage play whereby the buyers/holders of rights were shorting UTG common stock



OCB Bancorp (OJCB) – Merger Arbitrage – 10% uspide

Current Price – $12.75

Acquisition Price – $14

Upside – 10%

Expiration Date –  Q4 2017

This is straight forward merger arbitrage opportunity in nanocap land. Liquidity is very low – thus limit orders and lots of patience are needed to accumulate the position. I consider current spread (10%) to be attractive as I see limited risks of this deal falling apart. Low liquidity is likely the main reason for the spread to exists.