I had a 30 min. discussion with my broker yesterday on ARCP after he had done a complete review on the company for his clients. Not me, but I have met one of his clients that had $1 million invested in the private IV being bought by ARCP. The shareholders of IV will benefit getting far more shares of ARCP in the deal if the price is lower of ARCP....Cash and/or Share combinations when the closing occurs. We feel many large whale's own both, and have been with Amer Capital on most of the private REIT's before. We believe, management owners of IV also stand to make the same gains as individual investors. In summary our conclusion is this is the reason for the price decline, and it is temporary until after the closing of the deal. Also, the price may have gone further down than they expected as several of the insiders recently bought in the low $13 range.....but the mid $12's still offer significant gains for them personally from IV being bought. In addition, we feel weak retail hands holding have sold off ARCP on the decline in PPS lately. My broker deals with them from his parent company who does make a market for ARCP on the wholesale trade side.
This all came for the analysis for his $1 million dollar client invested in IV, and his conclusion is he could make as much as a 40% gain depending on the lower share price at closing. Many large investors will be cheering for the low prices to remain through closing. I added more yesterday, my broker, and his partner are both buying for themselves, and other clients. In his view, first quarter of 2014, and right after the closing prices will rise sharply to the true value of ARCP and their new assets under management. His parent company analysis guru's have weighted in on his homework. He offered up info on shares of ARCP returning to $15 plus levels in the 1st Qtr. 2014 and/or starting shortly after final closing of the buy of IV. He does not know exactly when the votes will pass, and the deal will finish.
steve...... thanks for taking the time to share that info. meanwhile, brad thomas commented (seeking alpha) on the falling ARCP share price by saying, "No institutional followers. just retail and hedge funds...In short, not a mature stock (yet)." he's a buyer.
Sounds right. Interesting how ARCP can be down 1.44% on just 300,000 shares.The news on this company is not terrible. Interest rate sensitive stocks are out of favor but multiple 2% drops on a 7% payout stock on 200,000 shares seems fishy to me.
In short, these prices are temporary and it's the way Wall Street works the market. The Inland deal has thrown in another dynamic. We will see a raise in dividend's by .03 cents or more, but he is confident that the company ARCP is undervalued at this time, and above fair value pps trading will return after deals close. He still remains confident of $20 pps area mid to late 2014 based on the assets taken in. I know he personally has $50k invested in this himself, and money for other family members.......skin in the game. Do your own homework, invest on your risk, and decisions. Just passing along personal conversations from my well informed trust advisor...I added another 18% averaging down if it matters.
"He still remains confident of $20 pps" - you should ask what he feels the yield and dividend payout will be at that time. A very aggressive 5% yield requires a div. of $1 (6.5% increase) and a mildly aggressive yield of 6% requires a near 30% increase in div. payout. Where will this come from? Remember that ARC4 shareholders bought at $25, 10%+ is taken off the top for broker commissions, fees, etc. That money is deployed into a portfolio split between ARCP and ARC4 (plus a few other assets) and ARC4 shares are now being sold to ARCP for $30+. NNN REITs are off 20-30% since the original offer was made. Even if the premium was justified then, how is it justified today?