What are the odds re ORH

[valuecfa]

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.

 

It is a yield investment, which is stil a pretty nice yield. I believe it has nothing to do with being called.

[FlyingArrow]

Many of us sold and bought back into FFH. In my case sold at 62.50 and bought back into FFH at $367 CAD on Sept 14. Lucky timing but the runup in FFH to $398+ CAD means that the ORH deal would have to close at more than $67.80 for me to have left any money on the table. I think that highly unlikely.

 

Given that I originally sold FFH at $372 CAD to finance the purchase of ORH at $48 this has been a very satisfying round trip.

 

 

 

[FFHWatcher]

Has anyone's opinion changed or became even more convinced with the ORH buyout with only 5M shares or so traded at above the proposed buyout price? 

[ERICOPOLY]

Many of us sold and bought back into FFH. In my case sold at 62.50 and bought back into FFH at $367 CAD on Sept 14. Lucky timing but the runup in FFH to $398+ CAD means that the ORH deal would have to close at more than $67.80 for me to have left any money on the table. I think that highly unlikely.

 

Given that I originally sold FFH at $372 CAD to finance the purchase of ORH at $48 this has been a very satisfying round trip.

 

 

I too sold at $62.50 and got back into FFH at $344 USD.  $67.58 price for ORH is needed to match this.

 

The other thing I did with the proceeds was to write Jan 2011 $30 WFC puts for $8.88.  Today those puts are at $7, giving me a price of $68 from ORH to match it.  Not sure if this will be the best way to go with WFC, but it will be a 42% 16 month return if WFC is at or above $30 when they expire -- I like that, you know, 42% is okay with me... I think it will beat the market  ;D

[arbitragr]

 

... write Jan 2011

 

Hey Eric, may I ask why you didn't do it for the Jan 2012 ones? Too long? Premium is higher but ...

[ERICOPOLY]

 

... write Jan 2011

 

Hey Eric, may I ask why you didn't do it for the Jan 2012 ones? Too long? Premium is higher but ...

 

 

I don't remember the 2012 being available at the time.

 

However, going by the prices today the delta is only about $1.80 between the 2011 and 2012 puts.  That's not enough to wet my whistle.  I think it's (my bias) already a given that the shares will be at $30 in 2011, so making an additional $1.80 for the following 12 months only gives me an extra 8.5%.  That's just not high enough of an annualized return... 8.5% is crappy.

 

It had to be at least 12 months to expiration because I don't want to pay 35% short-term capital gains rates... so that left me with the 2011 as my only viable option.