Stopped out and Bought Out, and a few nibbles

By Travis Johnson, Stock Gumshoe, August 11, 2010

I’ve closed two positions recently, neither for fundamental reasons — I’m a little embarrassed to tell you this, but I failed to notice that one of the few stocks I held a stop loss order on, Energy Recovery (ERII) was indeed stopped out when I was preoccupied with other things, but that is now no longer one of my holdings. I’m keeping an eye on it for possible re-entry, there hasn’t been any news to speak of.

And this morning I sold my shares of Hyflux Water Trust, the Singapore-listed income trust that owns Hyflux-built water treatment plants in China. I was reasonably satisfied with their performance, with not much in the way of capital gains yet but a solid continuing dividend while I waited for them to grow, but apparently the parent company wasn’t pleased enough — they partnered up with Mitsui to make a “voluntary delisting” request and an “exit offer” to shareholders, it looks like they’re essentially taking the company private as a joint venture and Hyflux is giving up on the idea of using the Trust as a way to fund growth and sell off their maintenance assets. They offered a small but reasonable premium (roughly 15%), and it seems likely to me that the deal will go through, given Hyflux’s already large holdings (31% or so), so I sold my shares for price a little below the offer price just so I can free up the capital now rather than wait out the closing of the deal, which will probably be at least several months hence.

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The “exit offer” price, by the way, is 78 Singapore cents, which is about 57 cents in US dollars. I happily settled for 56 cents on my sale of shares through the pink sheets — an additional possible gain of less than 2%, or the possibility of a buyout at a higher price (which seems unlikely to me), didn’t seem worth it for several more months of having my money tied up.

I haven’t been doing much trading recently, as you can tell if you’ve been watching this space, but for those who any interest in options I have done some speculating this week on Citigroup long-dated call options (2012 Leaps) and Camac Energy (CAK) call options for next February. I don’t generally disclose all my options positions since they can change ...

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