Current Price – $0.40
Intrinsic Value – $0.55
Upside – 37%
Expiration Date – July 18, 2018
rights offering
LGL Group (LGL) – Pending Asset Sale – 20% upside
Current Price – $5.5
Expected Price – $6.7
Upside – 20%
Expiration Date – TBD
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 to lock in the arbitrage profits (although this was never a sure thing, as arbitrage profits are dependent on the average trading price over the last 5 days). With a number of articles posted on SA the trade likely became quite popular and caused downward pressure on the UTG share price, which declined from $35 to $31 over the last couple of weeks.