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Alliance One International, Inc. Message Board

  • flying_nobodaddy flying_nobodaddy Jan 19, 2010 4:10 PM Flag

    1.3 million share block ...

    ... went through today at 11:47.

    This stock is under massive accumulation by one or two parties.

    What are they frontrunning?

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    • Its not on quantumonline and I dont have a link to the prospectus, but bottom line its 1,000 par, cumulative 6.75%, initial conversion at 21.4 shares (however, the conversion amt adjusts higher at each divy, see press release), manditorily convertible if it exceeds 135% of the adjusted conversion ratio and is redeemable on 3/15/2018.

      There are other specifics, including the conversion adjustment for dividends, such as a make whole provision should the company get acquired. You get additional shares on a "fundamental change" according to a schedule that scales down as the stock price increases and with time passing.

    • Yeah saw that, dont understand why some people use market orders on an OTC. Basically he got raped by his broker from their inventory...

    • Someone liked the idea enough they overpaid to buy some UVVZP today. It is very illiquid, so it would be best to wait for some bad news and have a limit order ready to catch that.

      Do you have a link to the prospectus? I couldn't find one on UVV web site. What is the conversion ratio? What are terms of buyback if any? When is maturity?

      It's an interesting variation to study. I hate to pay so much above par for a bond of course. Wish I had seen this one earlier. Thanks so much for sharing it.

    • If you feel like you missed the boat on these, consider the preferred convertible for UVV. Its OTC so it trades like crazy, but the fair trade value is around $1225-1260. Yields 5.5%, but its trading at a 4% convert premium, which implies a payback of 1.86, which is exceptionally low on this stock. If you can source it, I would suggest buying as much vol as you can and shorting the commons on a high delta. The small premium makes its easy to make money off of either side of the strat. JMHO.

      Good luck on UVV or AOI.

    • Blackrock has now 7% of the company , as it is a well known edge funds looking for special situations ( like buyouts / mergers etc ) , may be they are buying on the rumour of Philip Moris interested by AOI ......

      at 3.5 times P/E AOI is anyway a bargain ...

      • 1 Reply to joretra
      • This stock is doing some hocus pocus with a cheap PE and a perceptional "retail cheap" $5 stock price. If you look at their numbers, they had a huge tax benefit versus a provision. Also, their P/E looks better than UVV given their increased leverage and its impact on WACC.

        But if you look at it on an EBITDA to enterprise multiple, they are actually the same value, and UVV is actually slightly cheaper on a normalized annual basis.

        Also, when you include SG&A into gross profit, given the two companies have different cost allocations into their PNL captions, the gross margins for UVV are not only better, at the margin, they showed a better rate of improvement versus AOI. That shows operational improvements to the upside that is not capped in the stock price given the delayed shipment and lower volume in the recent quarter. In sum AOI had good cost control, UVV had good cost improvement.

        Further, UVV is paying a 3+% dividend and buying back stock. AOI is likely to get to the same place by reducing their leverage ratio, but cash is king and at the moment, 1 bird in hand is worth more than 2 in the bush.

        But there are headwinds on both stocks. Whatever happened with the reduced sales from JT? How much quantitatively does the increased global taxes and regulation adversely impact earnings at the ag level? How does the lower crop yields in Brazil impact farmer loan provisions for this year? Both stocks are facing these issues and thus both stocks are cheap... But, if you had a choice to buy UVV or AOI at the same price, which would you choose?

    • 2 major hedge funds are buying = BLACKROCK and LUXOR they now each have more than 5% of AOI .
      They are the best hedge funds with big brains and very good analysts . time to follow then

1.85-0.01(-0.54%)Nov 26 4:04 PMEST

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