Special Situations — Fat Pitch Tender Offers

This is an interesting one because it was submitted by the person doing the “teasing” — George over at Fat Pitch Financials, which is a great value investing blog, runs something he calls a “Special Situations Real Money Portfolio” in which he seeks out things like buyouts, tender offers, going private transactions, and the like, where he can make what are essentially very short term arbitrage investments when small odd-lot holders are given some kind of preferential treatment in a larger transaction.

It’s a great idea … but he doesn’t give away the farm, so he has a paid section. And in a recent post that he forwarded to me he teased out two “special situations” that he’s investing in with this portfolio.

If you want to pay to join his “Contributors Corner” it will cost you $12 a month or $100 a year — so this is nowhere near as expensive as most newsletters, and the main thing you get for this (in my opinion) is the list of current special situations investments.

However, paying people for ideas when you don’t want to isn’t what the Gumshoe is all about … if you don’t want to pony up the cash, listen to your friendly neighborhood Gumshoe and I’ll share with you his latest teasers:

Here are the relevant quotes from his site:

“I also purchase shares of a company that is buying back shares in a tender offer that includes a preference for odd lot holders. I bought 99 of these shares at $11.97 per share and I expect to be cashed out of all of these shares in about a month at $12.65 per share.”

“$3,771.12 … in cash … will be invested shortly in an additional odd-lot tender offer opportunity at a big newspaper.”

So, since George issued this challenge to the Gumshoe, I can tell you what I think the names of these two companies are (and recommend that you at least check out his free site, even if you don’t want to pay to join)

And frankly, George doesn’t go in for the hyperbole … so I can’t have as much fun with him as I do with the breathless newsletter touts. But anyway …

The first tender offer, with a buyout in roughly a month at $12.65 a share, is Premiere Global Services, Inc. (PGI). You would have had to buy this right when George did, at $11.99 the morning after they announced the tender offer, to get the 8% one month return … but it’s still about 1.5% below the $12.65 offer price if you want a quick couple of bucks.

Don’t know anything about this company, but if you’re just getting in for a buyout you really only need to know that they’ll go through with it. They’re borrowing the money and that appears pretty solid, and the odd lot preference is there (odd lots in these cases usually mean any holdings of 99 shares or fewer). The key to odd lot preferences in these cases, where something less than the whole company is being bought, is that the odd lots are bought up first, so you don’t have to worry that the buyout will be exhausted before your shares are picked up.

And the second one, the big newspaper with a tender offer that gives preference to odd lot holders, is almost definitely Tribune Co. (TRB) — no other clues are given, so I hesitate to say I’m 100% certain on this one.

Probably everyone has heard of this newspaper buyout, whereby Sam Zell is using lots of leverage and the employee stock ownership plan to buy out the venerable newspaper publisher, but you might not be aware — as Fat Pitch brings to our attention — that this deal also has a bit of an odd lot preference to it. The buyout is at $34 and will close pretty soon, so there’s a bit of room left for gains (shares are under $33 as I type this). And the odd lot preference is that the odd lot purchases will not be prorated as the larger lots are (that essentially just means that all odd lots will definitely get the $34).

So … a quick introduction to an interesting little service that I wouldn’t have featured here if it weren’t for George issuing his Gumshoe challenge — some nice little opportunities get uncovered over there every now and then, with potential for relatively low risk returns in short periods of time for those who want to read the detailed SEC filings about special situation selling.

So thanks George, and thanks to the rest of you for reading — good luck with your investing.

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7 Comments on "Special Situations — Fat Pitch Tender Offers"

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Anonymous
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Anonymous
May 5, 2007 8:18 am
Appreciate Stock Gumshoe, and all your good work! How does one submit a “teaser” for research? If this is a good avenue, take a look at the following: TFN Sector Alert – 5/4/07 Avoiding Australia’s Uranium Bloodbath We’ve known this has been coming for months now. Less than a week ago, Australia’s uranium industry was dealt the death blow no one ever saw coming. But one company is perfectly positioned to avoid the ensuing bloodbath in Aussie uranium stocks. And Citigroup, UBS, HSBC and JP Morgan have all been loading up on shares of this tiny $4 stock. But I’ll… Read more »
Anonymous
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Anonymous
May 5, 2007 8:34 am
Here’s yet another long-winded Uranium teaser: China’s $300 Billion Conspiracy to Stockpile Radioactive Fuel A Stealth Team of Chinese Traders Must Track Down Every Last Pound of U308 Uranium…But the Biggest U308 Miner Just Suffered a Devastating Flood…Now a Tiny Uranium Miner Has Been Catapulted to the New No. 1 Supplier of U308. Discover How “MEGA-U308” Could Turn Your $10,000 Into $40,003… Starting Now. “A state-owned Chinese company is to invest $30 million in a uranium mine in South Australia’s northeast.” — ABC News “China vows to stockpile mineral reserves.” — International Herald Tribune “China is already scrambling to corner… Read more »
Michael
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Michael
June 18, 2007 10:14 pm

Well, since i bought this stock in march 2007 it went from about 8.56 to 12.43 as of yesterday so it is not so bad.

michael

Phil
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January 23, 2008 1:27 pm

Finding your site was an accident thanks to google, but I like it

shawn disney
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shawn disney
October 12, 2010 10:50 am

ILongtime fan, , not vaery active. Have you commented on "Penny Auctiosn" , Stansberry, I think?.. Breathlesss accoounts of fortunes being made in pennies. It has to do with getting in options of thinly traded stocks , and correctly chooosing "active" ones, day to day. Of course, there's a "SECRET".

Bigg Fredd
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Bigg Fredd
October 12, 2010 12:44 pm

There's an old joke. Investor buys a thousand $ worth of a thinly traded stock.

Happy with the jump the next day, he buys another $1000.

As the stock continues to rise as high as 10x what he originally paid, he keeps buying more, eventually mortgaging his house to make a huge purchase.

The stock doubles again, and he instructs his broker to sell it all.

"To who?" was the reply.

As with many jokes, there's more truth than fiction there.

dtdarbo
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April 16, 2015 2:56 am

These odd lot tender opportunities lately became far less profitable, as it became widely discussed on Seeking Alpha and even paid services such was http://www.specialsituationinvestments.com/ appeared. So the more it is discussed the less interesting it becomes.

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