One negative is an additional director's fee as he is an addition not a replacement.
You assume that there is a limit to their greed and that other non holders don't want the potential profits. I conclude that the market at present is luke warm on Elliott's proposal.
I suspect that Blackrock and Orange Capital are not now on board. If that changes then others will join the band wagon and the stock price will move up.
The market's reaction so far does not indicate a surge of institutional buyers trying to get a piece of the possible $23 per share price.
I do not know. However, it will succeed or fail based on the votes of the institutional not the individual holders.. The large majority of shares are held by institutions as individual have sold due to the lack of a dividend.
I believe that the posters on this board should continue to discuss the plan and to vote for what they believe is in their best interests. But the final decision rests with Blackrock, Orange Capital and the other large institutional holders.
This emphasis on dividends implies that the investor is planning on being a long term holder. Why would one want to be a long term holder with this management?
They will load the BDC's with high fees and expense reimbursements. ACAS will be granting large stock options and paying excessive compensation. Are there not better income opportunities elsewhere?
Many investors in ACAS are hoping for a pop in the stock on the spin off in order to sell and exit the stock. Elliott's plan to realize value appears more long term in nature.
I think that a 33% share of the outstanding share or about $1.4 billion would effectively secure control. The vote on the management agreement requires 2/3rd of the shares voted. Other proposals require 50% of either the outstanding shares or the shares voted. If Blackrock's 10% goes along then Elliott probably needs only about 23% of the outstanding shares or about $1 billion worth.
Elliott has $28 billion hedge fund plus backing of billionaire Paul Singer. If they really believe in $23 value then why not make a tender at $16 for all the shares or just keep buying shares in the market?
it is about $4 per share of write up on ACAS books for their estimate of the value of ACAM.
Remember ACAS marks all their investments to market value and this is their estimate for ACAM.
ACAS will now become a C corporation and no longer mark their to market (although ACAP will).. For ACAS to now put a $4 write up on its books would be the accounting equivalent of levitation and is not permitted under GAAP.
This reflects the elimination of ACAM write up from NAV. ACAS to have 4.13 NAV ($1.106 billion) and ACAP to have 12.56 NAV ($3.366 billion) for combined 16.69 NAV). Year one forecast of ACAS NOI of ,38 ($102 million) and ACAP NOI of .88 ($236 million) for combined NOI of 1,26 ($338 million). All per shares based on 268 million shares outstanding.
The question now is how the market will value each of these entities. It's hard to see ACAP at more that $9.
At 15 PE ACAS could be about $6 for combined $15. At 20 PE ACAS could be $8 for combined $17.
All calculations ignore the effects of splits in the shares outstanding.
Annualized that's $1.40 and warrants $14 per share for a 10% income to the holders.
It is interesting that my conclusion of weakness in the share price, which was first presented about a month ago, appears to be working yet is rejected by a number of posters some of whom may be recent buyers of the stock. If for no other reason why would anyone want to support the price prior to the spin off and help enrich the employee option holders and add to the NAV dilution? These employees have demonstrated no interest in either buying shares in the open market or retaining an ownership interest.
My observation covers not only what may happen but also the perception of what may happen. Clearly, the market should be gun shy about purchasing before the spin off.
The primary reason for the stock price languishing is buyers holding back for three reasons. First, the prospective buyers know that there is a potential 40 million option exercise shares to be sold into the market with probably no more than 25% buybacks of those shares; Second, some of those option exercise shares are probably now being sold; Third, the lower the price between now and the spin off the less the dilution and the lower the price of buybacks.
In summary,, a lower share price between now and the spin off is a win win for those who hold through the spin off and a lose lose for those selling before then.
Thanks for your reply. I share your concern about the high tax bill on a sale of ACAS. I believe you are correct that it may take a year to achieve a fair value for ACAS. My worry is that a bear market may intervene before then and the time table could be extended. I hope lightning strikes and fair value is axhieved sooner.
I understand your view that there is value to be unlocked here. What I don't understand is your willingness to view this as a long term investment with a management that appears to put its interests ahead of stockholders' interest. Many investors cite the quality of management as the most important factor in selecting an investment.
It did not bounce on the possibility of a spin-off, or plan for a spin-off, or filing a plan with the SEC. Now we eagerly await the spin-off anticipating that this will unlock value. Is it possible that it will not and we will then hope that the passage of time will unlock the value - say another year or two? Is it possible that if and when the value is unlocked that the appreciation from now will be no greater than that of the overall market? I do not know the answer to these questions but I continually ponder them.
By buying out the options of employees who want to exercise and sell this will have two positive effects: it will eliminate the downward pressure on the stock price from those intended sales and it will eliminate the need for
ACAS to buy back those shares when it is facing a limit on buybacks to 25% of the trading volume.
I believe that there are exceptions to the 25% rule. For example a direct purchase from a major holder. Alternatively, why doesn't ACAS buy out an employee who want to exercise an option an sell. If the spread is $100,000 then buy him out the option for $100,000. There would be no need to buy these shares back.
On another subject, will the spin off ultimately add shareholder value? All events to date have not: the possibility of a spin-off, then the announcement it was under consideration, the there was a plan, then it would be filed with the SEC in the 3rd Q Now we are waiting for the filing - what will be the market's responce?
It matters to those who would like to increase their holdings while the price is low. They may be better off waiting until just before the spin off.