Stopped out and Bought Out, and a few nibbles

by Travis Johnson, Stock Gumshoe | August 11, 2010 1:25 pm

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.

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 frequently and are often very silly speculative bets, but those are two new ones I’ve nibbled at just to give you an idea of my current thinking — Camac in particular is looking appealing now that the price took a hit on the CEO’s departure, and a further hit on the news that Camac Energy may be buying more of Camac’s interest in Nigerian offshore oil and gas leases (including the operating Oyo field that Camac Energy bought part of recently as part of its restructuring, and which has made them “cash flow positive”).

Camac Energy was teased as a Chinese coal-bed methane stock a few months back[1], in case you weren’t with us then or don’t recall, though the near-term results will be driven by Nigerian production.


Endnotes:
  1. teased as a Chinese coal-bed methane stock a few months back: http://www.stockgumshoe.com/2010/05/monster-gas-discovery-tiny-us-company-hits-jackpot-white-cap-report.html

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