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SUPERVALU Inc. Message Board

  • cash_is_king_now cash_is_king_now Feb 17, 2013 11:17 AM Flag

    How many of your tendered shares will be accepted??

    Recently, 4 funds filed SEC 13d since their ownership went above 6% as follow
    1- State Street Corporation: 17, 087, 093 shares or 8%.
    2- State Street Bank and Trust Company: 14, 008, 337 shares or 6.6%.
    3- The Vanguard Group: 13, 063, 383 shares or 6.11%.
    4- BlackRock, INC: 13,831, 642 shares or 6.48%.
    The funds went above 5% recently to keep the shares for long term instead of selling for 10 cents profit.
    There are many other funds that stayed below 5%, but we just ignore them for time being.
    The above shares are about 58 MM shares. Then there are 88 MM shares short according to recent released numbers. 88 M shares should be supported by 88 M of shares (they cannot be backed shares).
    88 + 58 = 148 or almost 70% of shares.
    Now if you add many other investors and funds who do not tender either then the percent will go higher.
    Thus, less than 30% will tender and if you tender the chance of all your shares being accepted is 100%.

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    • Well done analysis.
      88 m shorts need 88 m shares long to borrow shares for shorting. On the other hand, 88 m shares should be put aside that cannot be sold or tendered. So, only (126 = 214 - 88) m shares left to tender. That is 50% = 64 / 126 of your shares at minimu will be accepted. However, there are many investor who don't tender and some shares are tied in some account like ETF that will not be tedered. I say the chance is over 75%.
      At $3.84, returns is 4.1% and if the price goes lower then the return will be higher.

      Sentiment: Strong Buy

    • Thoughtful analysis.
      I agree that not many funds will tender and most tender will come from retail investors who hold probably less than 7%.

      Still, some small funds will tender and my guess is that only 15% to 25% of outstanding shares will be tendered or chance to get $4 for all shares for those who tender will be very high or almost 100%.

      One scenario is if number of tendered shares goes above 30% then some shorts are forced to cover by next week. In that case, it will be a short squeeze and the price may jump way above $4. That’s why I will not tender all my shares and I keep some of them in case. After all, if BlackRock, Vanguard and State Street have loaded and Moody’s, Fitch and S&P upgraded then this is no brainer since the price will go above $6 a few months after the deal is closed.

 
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