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Jaguar Mining Inc. Message Board

  • Cliffvb Cliffvb Dec 9, 2011 2:51 PM Flag

    great odds for longs here

    Current price of JAG is 6.36. If a buyout goes through, we can expect we will see a minimum of $9.30/share, a gain of $2.94. If the buyout doesn't materialize, the price will go back to the area it was before the buyout offer was leaked; probably somewhere in the low 5s. Let's call it $5.00 even; so there is a loss of $1.36 if that happens. That works out to 2.94/1.36 or 2.16:1 in favor of the longs.

    What are the odds of the buyout happening. I think it is around 90% but lets assume here there is a 75% chance of it happening. That is 3:1 in favor of the longs.

    Overall expected net gain:
    .75 x $2.94 less .25 x $1.36= $1.86

    1.86/6.36= 29% overall expected net gain for a short term holding.

    For this to be an even money proposition the odds of a buyout going through would be only about 32%, or less than 1 in 3! :
    .32 x $2.94 less .68 x $1.36 = $.015 (slightly better than even money proposition-still better than Vegas)

    JAG is underpriced by a large margin here.

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    • Has even one word been uttered by either JAG or Shandong since this " deal" was announced? The Chinese are smart. Does anyone believe they will pay 9.30 for JAG when they can buy all they want in the low 6s?? Hello everybody!!! I am not short...only wish I had gone that way when I sold at 7.37. It 's time to sit and watch JAG....neither a buyer nor a seller be...or even a lender or a borrower...Who said that?

      • 2 Replies to van1451
      • Shandong needs to get the approval of the Chinese government before they can move funds out of the country and buy anything including share purchases on the open market. That plus the fact that there are rules against trading with inside information is why they are not buying cheap shares here.

        We can buy now but everyone seems to be happy to wait and not buy anything on days like today.

      • They cannot buy all they want - institutions and funds control this company. They know it's worth, are not selling and will pile on the Board if they don't work this out. They have already gotten the CEO ousted. And, they don't want a taxable deal.

    • I can agree with virtually everything you said there, Cliff. The main thing keeping me from getting back in is the potential for another 20% drop if the deal falls through, then the uncertainty of Gurupi. If it dips back below $6, I will definitely pick some up, but I'm still worried about the Gurupi funding if the deal doesn't materialize.

    • I don't think $5 is accurate. I would assume $4. Production issues as Pacienca. CEO Gone. Deal falls through. Company would be viewed very negatively.

      $5 is very optimistic in this scenerio.

    • And the 5 dollar downside potential really should be temporary. This is not a 5 dollar stock, the apparent buyout of 9.30 is more a true indicator where this should be.

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