PlanMaestro Posted December 4, 2010 Posted December 4, 2010 Given the low interest rates, reasonable valuations in several sectors and renewed access to debt it is starting to feel like the 1980s. One of the stocks I own just received a lowball going private offer, 5% premium to the most recent price and 25% of all time highs, from its largest shareholder (70%). Does anyone has experience on how to oppose self-dealing transactions?
mhdousa Posted December 4, 2010 Posted December 4, 2010 Given the low interest rates, reasonable valuations in several sectors and renewed access to debt it is starting to feel like the 1980s. One of the stocks I own just received a lowball going private offer, 5% premium to the most recent price and 25% of all time highs, from its largest shareholder (70%). Does anyone has experience on how to oppose self-dealing transactions? Is this CPD?
Junto Posted December 4, 2010 Posted December 4, 2010 You guessed right or he follows your twitter feed... ;)
mhdousa Posted December 4, 2010 Posted December 4, 2010 You guessed right or he follows your twitter feed... ;) Nope. I own it as well, and was also wondering how to oppose the offer.
shalab Posted December 4, 2010 Posted December 4, 2010 I am curious what you think is the value of the company
PlanMaestro Posted December 4, 2010 Author Posted December 4, 2010 After a complete settlement of the FDA quality issues? Probably something closer to $20. 2x sales for a high operating margin, low capex, 20%+ growth per year seems ... fair. SunPharma is really lowballing this, they recently announced that some of the issues are close to be resolved and shipment of some products resumed. This was supposed to be my Oil Salad scandal, it is getting more complicated than that.
scorpioncapital Posted December 4, 2010 Posted December 4, 2010 moral of the story: consider the risk of a majority-controlled public company in realizing value.
PlanMaestro Posted December 4, 2010 Author Posted December 4, 2010 moral of the story: consider the risk of a majority-controlled public company in realizing value. I think the punch line - not much of a fan of moralizing with investments - is that investing is always risky and a large margin of safety has to be demanded. For example, you can also get hit by management doing stupid transactions when control is diluted (ie: Kraft is a small mistake, but sure you guys know some more destructive like BAC/ Countrywide). I actually have a small 15% profit since Sept 2009 but was expecting something much better than that. 5% premium, close to the a 52w lows and well below the 52w high they will probably have to improve their offer ... merger arbitrage anyone?
zippy1 Posted December 4, 2010 Posted December 4, 2010 moral of the story: consider the risk of a majority-controlled public company in realizing value. I think the punch line - not much of a fan of moralizing with investments - is that investing is always risky and a large margin of safety has to be demanded. For example, you can also get hit by management doing stupid transactions when control is diluted (ie: Kraft). I actually have a 15% profit since Sept 2009 but I was expecting something much better than that. 5% premium, close to the a 52w lows and well below the 52w high they will probably have to improve their offer ... merger arbitrage anyone? Hmmm. If the deal goes through, you get a minor upside. If it takes 6 months to close, probably a 10% annualized return? If the deal fails to go through and your valuation is correct, you get even better results. I think it is a quite interesting situation. There is a similar situation in BCIS.OB where the majority owner ended up increasing the bid. It would depend on whether the outside directors, I think.
PlanMaestro Posted December 6, 2010 Author Posted December 6, 2010 Hey guys, my question is a real one. Today's price is above the offer so it looks like I am not the only one thinking that the it is inadequate. Does anyone has experience on how to oppose going private transactions or at least pressing for a better offer?
Myth465 Posted December 6, 2010 Posted December 6, 2010 Here is info on the BCIS situation. I would contact Geoff if I had more serious questions. http://www.gurufocus.com/news.php?id=108454 I think you know the answer to your question. As in most things in life, money talks. Start buying shares / contacting big holders. I believe more than 50% of people have to agree, but thats just my guess.
PlanMaestro Posted December 6, 2010 Author Posted December 6, 2010 Here is info on the BCIS situation. I would contact Geoff if I had more serious questions. Thanks for the suggestions Myth. The situation has a lot of similarities with BCIS and I discussed those with Geoff during the weekend. Very smart guy.
mhdousa Posted February 1, 2011 Posted February 1, 2011 Here is info on the BCIS situation. I would contact Geoff if I had more serious questions. Thanks for the suggestions Myth. The situation has a lot of similarities with BCIS and I discussed those with Geoff during the weekend. Very smart guy. PlanMaestro - Any updates on this situation? Thanks. -M
PlanMaestro Posted February 1, 2011 Author Posted February 1, 2011 Nothing, most of the people that I contacted were pessimistic on the possibilities of a successful persuasion or fight. A protracted merger arbitrage is not what I was looking for while sitting on other 5x and 10x chances. I had a little conversation with myself (do I want to be rich or instead to soothe my ego?) and decided to follow Philip Fisher's advice: avoid activist investing, either agree completely with management or move on.
Myth465 Posted February 1, 2011 Posted February 1, 2011 Nothing, most of the people that I contacted were pessimistic on the possibilities of a successful persuasion or fight. A protracted merger arbitrage is not what I was looking for while sitting on other 5x and 10x chances. I had a little conversation with myself (do I want to be rich or instead to soothe my ego?) and decided to follow Philip Fisher's advice: avoid activist investing, either agree completely with management or move on. Smart man. Its not worth it inmo unless you can buy a huge chuck.
zippy1 Posted February 23, 2011 Posted February 23, 2011 Would like to thank PlanMaestro for bringing up CPD. Bought at $4.75 in December and sold yesterday at $5.15. Not bad for a 8% return in a couple months.
PlanMaestro Posted February 23, 2011 Author Posted February 23, 2011 Would like to thank PlanMaestro for bringing up CPD. Bought at $4.75 in December and sold yesterday at $5.15. Not bad for a 8% return in a couple months. Glad you won this one zippy. I was on the sidelines, is it already a done deal?
zippy1 Posted February 24, 2011 Posted February 24, 2011 Would like to thank PlanMaestro for bringing up CPD. Bought at $4.75 in December and sold yesterday at $5.15. Not bad for a 8% return in a couple months. Glad you won this one zippy. I was on the sidelines, is it already a done deal? Not sure it is a done deal or not as I am not sure any major shareholders may sue or not. However, I am glad to get the money back and move on. I think I am saved by the price that I paid more than anything.
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