What are the odds re ORH

[valuecfa]

I've sold out of ORH as well. Though I think a higher price is very likely it is not worth the risk for a chance for an extra 5 - 8% above current market price.

 

Congrats to those that participated.  :D

[SharperDingaan]

 

Its pretty hard to make your case that you'll only pay $60 when 'the market' is trading at 5% above. The ORH board has to prove their DD to the minority shareholders, & they will be expected to challenge in these circumstances.

 

If you want the minority shareholders gone you have to pay them a premium - theoretically equal to the PV of their lost future benefit before tax. You will actually pay a little more cash as the minority shareholder will have to pay tax if he/she accepts your offer; & you cannot assume that everyone will take the agency shares to get the tax free roll-over.

 

So what if you pay 10-15% more. It's simply the reality of doing deals.

And for this particular deal, do you really think its going to matter that much 2 years from now?

 

Don't look the gift horse in the mouth

 

SD

[Smazz]

I sold 1000 shares ORH at 62.39 just now.  I still hold 1000 shares.

I sold at $62.50 so I win! :D Wait, you own more shares than I so you win ;D

[Crip1]

Al,

 

I see you sold, so this point is moot, but I was going to recommend that you sell, not necessarily because the price would not increase, but because it was a total crap shoot and was well beyond your control. It seemed to me (and still does seem to me) that you would be better off using your analytical skills on looking for the next investment. FWIW.

 

And, to add, I sucked my thumb throughout this, did not sell my ORH preferreds to re-purchase the ORH common and lost out on a tasty return. C'est la vie ineed!

 

-Crip 

[Partner24]

At this point today, more than 2 millions ORH shares traded. That means that more than 120 millions of dollars of money have been used to speculate that FFH will boost it's offer above 60$. That's short term stuff, but those who speculate like that face the risk of a material paper loss (at least over the short term) if FFH say "Bye bye" and a little permanent capital loss if remaining shareholders say "Ok" to 60$. Little short term upside potential for a more significant short term downside potential.

 

That being said, I'm not here to predict the odds of these two outcomes because it's not my kind of transaction table and these people are not at the same transaction table than me. I think I might apply for the "borest transaction table that you'll see around" contest. Most of the times, it has served me very well, but sometimes I lost an opportunity (like ORH recently). En effet, c'est la vie.

 

Cheers!

[Mikenhe]

I’ve now sold my ORH shares.

 

The upside (holding for somewhere between 2 to 7 dollars per share more) was overshadowed for me by the downside of the bid being rejected and the shares dropping into the 50’s or maybe below. Plus lessons learned from trying to squeeze and extra dollar or 2 out of the share price (Lehman brothers) and not just taking a good profit were applied here.

 

I’m still long FFH (and would have been longer ORH had this buyout not occurred ) so I now hope the takeover can be completed swiftly and the benefits to FFH be realized.

 

FFH have sold shares to make this happen which I’m not too keen on but as they were buying back for less previously at least they have made good use of the profit.. plus the buyback of ORH shares had reduced the amount that need to raise.

 

If FFH cannot find anything more suitable to invest in then I’m comfortable with them buying ORH.. and if that doesn’t come off them I’m happy to buy back into ORH at $50… ;D

[dcollon]

I wanted to say congratulations to the members of this board that benefited from this transaction.  A lot of you were very early in suspecting/suggesting that something might be happening behind the scenes. 

 

I continue to think this type of analysis/discussion/insight is what makes this board so special. 

 

Great job to the posters and the "management" ;)

 

 

[dowfin1]

you cannot assume that everyone will take the agency shares to get the tax free roll-over

 

 

Can you please elaborate on how ORH shareholders can structure this as a tax free exchange for FFH shares, or have I misunderstood your comment?

[smw397]

I wanted to say congratulations to the members of this board that benefited from this transaction.  A lot of you were very early in suspecting/suggesting that something might be happening behind the scenes. 

 

I continue to think this type of analysis/discussion/insight is what makes this board so special. 

 

Great job to the posters and the "management" ;)

 

 

 

Not just congratulations but many thanks! 

 

If not for FFH and ORH I would have crashed and burned over the last year.  I spent my whole life up until recently learning about everything but money.  Now that I am sticking my toe in these waters I consider myself exceptionally lucky to have found a resource like this board where I can reap the benefits of all the expertise amassed by such a visionary group of investors.  Somebody said the other day this has been almost like insider trading, only legal.  It is certainly the fattest pitch I've ever had a chance to swing at, and I wouldn't have had the courage had I not learned so much from the informed debate here. 

 

I especially want to thank Sanjeev for maintaining this forum, and just say I hope I get a chance to buy you one of those big ass-burgers one day! ;D

[SharperDingaan]

 

Because the shares are being 'exchanged' (ORH for FFH) there is no 'sale', as only the cost base of your shares has changed. If you take the cash you have sold your shares, & are subject to immediate tax on your gain.

 

There is no impact if the shares are in a RRSP or IRA account, but if they aren't it can wreck your day.

 

SD

 

 

 

[valuecfa]

http://sec.gov/Archives/edgar/data/915191/000095012309041716/o56955sctovc.htm

 

Let's get that deal closed at $60!

 

(Now that most of us have sold our ORH shares)

[Viking]

I also decided today to sell all my ORH shares. The price was $62.50 and being Canadian was not liking continued large exposure to the US$. I also had 50% of my net worth in ORH (before Q2 results) and will sleep better tonight. Fortunately all shares held were in non taxable accounts (RRSP, RESP & TFSA) so I do not have any tax consequences.

 

Having sold my FFH shares a few weeks ago, I am now back to 100% cash.

 

Just like others have metioned, time to find another fat pitch... Which probably means wait for the markets to sell off and put it back into FFH at 0.9xBV...

[omagh]

Right now, the market is discounting a takeout at ~$65-67 rather than the $60 offered by FFH.

 

After going through a couple of buyouts of 2 Canadian stocks already in this rally since March, I'm biding my time.  So far, buyers have either paid more or been rebuffed and the price still stayed at the bid.  If another undervaluation comes along in my research, then I may pull the plug sooner.

 

I'm mostly raising cash from US holdings back into C$ as well.

 

-O

[arbitragr]

I wanted to say congratulations to the members of this board that benefited from this transaction.  A lot of you were very early in suspecting/suggesting that something might be happening behind the scenes.  

 

I continue to think this type of analysis/discussion/insight is what makes this board so special.  

 

Great job to the posters and the "management" ;)

 

 

 

Hats off to Eric and others for letting us in on your inside trade.  ;) ;) ;)

Let's find the next one and band together to push the premium up again.  :D

 

[omagh]

http://www.gurufocus.com/news.php?id=68897

FFH is buying above their offer of $60.  That's a strong indicator of an increased offer.

 

-O

 

Right now, the market is discounting a takeout at ~$65-67 rather than the $60 offered by FFH.

 

After going through a couple of buyouts of 2 Canadian stocks already in this rally since March, I'm biding my time.  So far, buyers have either paid more or been rebuffed and the price still stayed at the bid.  If another undervaluation comes along in my research, then I may pull the plug sooner.

 

I'm mostly raising cash from US holdings back into C$ as well.

 

-O

[T-bone1]

I'm not seeing a filing for this anywhere .  . . and I'm not sure this would be legal.

[JEast]

GuruFocus.com corrected their statement after missing an amendment by Fairfax.

 

 

Cheers

JEast

[omagh]

Thanks 653211/JEast.  Here's the correction notice from Gurufocus.

 

Cheers,

 

-O

========

Correction:

 

Fairfax Financial did not increase its holdings in Odyssey Re since 6/30/2009. The confusion was caused by an Aug. 14 13-F filing of Fairfax, which indicated that Fairfax owns about 37.8 million shares of Odyssey Re. Fairfax filed an amendment on Aug. 17 to correct the errors about Odyssey Re. GuruFocus missed that amendment, which resulted in this confusion.

 

GuruFocus.com corrected their statement after missing an amendment by Fairfax.

 

 

Cheers

JEast

[ubuy2wron]

I sold my stock and then legged into a bull spread with the Feb 2010 60 and 65 options with a cost of 2.00 net. 

[Uccmal]

Well tomorrow sees FFH getting the cash.  I would think that the odds of an increase in the price of ORH must be getting less and less with each passing day. 

 

 

[ECCO]

With respect to all of you guys that think they will not increased their bid, I think you are of the track on that part. A buyer never give his best offer first, Prem knows it. What is happenning now is a big show. Some people "study" the offer, they will then come to the conclussion that 60$ is low, that the "true" value of ORH is between 63 and 68$, Prem will offer 63$, that will not be enought, the deal will close at 64$ or 65$ and everybody is happy.

 

Anyway, will should know it by next friday.

 

ECCO

[benhacker]

Interesting discussion.  Luckily we have a market where we can place our bets.  I'm really surprised how many have sold, but I do see the logic.

 

I'm in the camp that a raised offer is probably an 80% or more probability so I'm holding (assuming final offer is $65+).

 

Hopefully it will be done an decided in a few weeks... shouldn't take long to figure out what your company is worth. :)

[smw397]

The bell curve analogy is what did it for me.  I got 78% out of my shares and 94% out of my Feb 35 calls when the stock hit 62.50 on Monday.  While another 2 or 5 or 10 dollars would be wonderful, I couldn't convince myself by Monday afternoon that the odds of further moves in that direction were any greater than the odds of the deal collapsing, or the odds that the share price might retract some over speculation that the deal could collapse.  The profit on the table was too easy not to take it while the profit left to wait for was too risky to wait for.

[Cardboard]

I am wondering how much longer we are going to have to wait for this special committee or the board of directors to make a recommendation. If you look at the sequence of events at Northbridge, we should have heard by Monday. Either the negotiation to raise the price is dragging on or it is Sandler O'Neill that is taking way too long to come up with their fair value opinion. 

 

It would be interesting to know at what point Odyssey Re is forced by regulation to publish third quarter results. At Northbridge, the deal was announced on December 1 (with a reco to approve) and the shareholders vote was held after December 31, but they did not have to publish year end results.

 

As Viking mentioned previously, Odyssey Re shares will have to trade at or close to $60 on their own merit in the near future. Book value keeps growing almost daily, they will keep buying back shares and since Andy says that business will remain flatish in the near term we may even see a special dividend or debt/preferred buy-back.

 

Cardboard

[gaf63]

Call price for ORHpA before Oct. 2010 is 26.  Today it is trading over 25 and 20,000 shs have changed hands up to 11:15.  So it seems a decision has been made on the preferred's.  Was hoping they would exchange these into FFH debt or leave as is.