The reason price is holding is because most investors are hopping to get $4 for their shares.
However, a large portion of shares will tender. If you hold 100k and tender them all then you get at least 30% or 30k at $4. Most or almost all stocks drop after tender expiration. Your brokerage may hold your the rest of your shares at least for a week. By that time, price may drop below $3 and you end up losing money although you got 30% at $4. You need to calculate it carefully so you don't end up losing money in this deal.
The price, I agree with those here who also say, could also rise. More confidence in this issue, after above $5 won't institutuionals be likely to jump in - beyond any penny rule they have self imposed?
Sentiment: Strong Buy
What you fail to consider is that when Cerberus buys 30% of the shares, that means almost 64M shares are taken out of circulation. With each share of stock sold, there is a buyer that believes the stock is undervalued. Your assumptions are based on a belief that Cerberus only buys stock that is at its peak. What investor says, "This stock is fully valued, I'll buy $250M please?" The share price will go up over time because there are less share available (64M) and a belief in a turn-around which I think Cerberus will accomplish. Short-term and after the tender, I do expect the price to drift below $4. I intend to tender whatever they'll take, and then buy when it dips again. There has been significant shorting of this stock the last year(40%). I think that will help in pushing the price down at letting me in again at something less than $4. Some shorts will linger for a while but long-term(2-3 years), this stock is a double at least.
I'm not making price predictions, but I would challenge your assumptions as well. Cerberus is not buying Supervalu shares. It is a newly formed investment group "Symphony" and they will buy a maximum of 30% and a minimum of 19.9%
Those shares are on the opne market. They can be resold as quickly as they are bought. This is not like a company buy back of shares whereby the float is reduced. There is actually a possibility that shares will have to be issued so that they can meet the minimum 19.9%
I don't believe that there will be a huge number of shares tendered. I may be wrong, but most guestimates from the MB crowd is from the perspective of short term holders that have bought since the meltdown in hopes of a buyout. I think that many are surprised that the tender was only for a maximum of 30% and only for $4.
Regardless, I contend that there are still many true longs that are averaged in at a much higher cost than $4 and will not accept the tender. The other side of that is ofcourse... To accept the tender is to surrender shares and exit all or part of your position. Accepting the tender would indicate that one does not have confidence in the stock to meet or exceed the tender price.
Ok, this tender if different from a tender that a company buys its own shares. When a company buys its own shares means the income will go higher since there will be less shares. In this case, the tender does not help income and the price should come down to where it used to be or under $3.
Could you give some reasoning behind your price drop to $2.50 when there will be 30% less shares available for trading? I could see a brief pullback from the people that bought for the Tender dumping their extra shares... But I do not think this would be deep or prolonged...
Not sure what the logic is here...
1- The average price before the tender was below $2.
2- Too many shorts who have covered but will short again after tender.
3- SVU may lose money again.
If this deal is canceled then the price will drop to $1.
Being a dope on this board, is not a crime. So you can continue to post nonsense as long as you would like. I just ask if it would be toom nuch trouble for you to remain consistent in your goofball opinions?
Just the other day I posted a thread inquiring about the Specifics and Logistics of the tender. This was med_investor response...
"Are you from the moon?
Why paper work for tender? The same way that you call your brokerage to sell You shares, you call them to tender the shares.
Usually one day after expiration date you should see your money and rest of your shares if your brokerage is not lazy."
Now you are proclaiming as much as a week to get your untendered shares back. I ask questions because I genuinely would like to know. You spout nonsense and then completely contradict yourself. At least attempt to post items that are somwehat beneficial to the MB community.
I told one day if your brokerage and SVU are prompt and not lazy.
Back to guy who first post about SSW, he indicated that he saw money in his account on Jan 19 or 21 while SSW tender was expired on Jan 11.
We all do our DD and collect data and we correct the data as we learn more.
I have no idea why you would say something so completely insane. The price may or may not drop slightly after tender for a few days. But it will absolutely go up from there.
Sentiment: Strong Buy