Actually, a couple of interesting announcements today for TINY. It looks as though TINY backed into Magic Leap with its tiny investment of 29,291 shares of Series B preferreds which they value at $338,604.. They did not invest in it directly, naturally. The return is too good for that, It was obtained as partial payment from the acquisition of a portfolio company in second quarter of 2015 according to Note 12 in most recent 10q. Having said that, the Series B round of funding was completed Oct 21, 2014 valuing the company at "north of $1 billion" and this new round of funding, Series C, values Magic Leap at $4.5 billion according to Wired. That's pretty impressive, however that still would only value TINY's stake at about $1.4 mil if my math is right. The Mersana news is probably more important. Probably the key to its importance is the possibility of milestone payments up to $750 mil for investors in Mersana from Takeda, but what's not said is the possible timetable for those payments..... I happen to have participated in milestone payments from Takeda in the past from a VC investment and as nice as it's been to be receiving the payments, they have stretched out over 20 years or more.... So again, figuring in a potential rate of return for investment, I wonder just how significant this can prove to be for TINY shareholders. The difference, though, is Mersana is a nearly $5 million investment for TINY, so that's good
It was good to see some good news that might really be good news for TINYfor a change, It's amazing the gigantic faith the investment community has put in Magic Leap now. Some really big names like Google, Qualcomm, Warner Bros, JP Morgan and Fidelity are all in on it now..... Again, according to Wired, many believe its technology will usher in a seachange as to how we all use computers. Then again it could turn out to be another Betamax as Facebook, Samsung, and MSFT are all working on competing technologies.
China - For the record, TINY does NOT own 4.4 mil shares right now according to the most recent 10Q. I don't know the conversion factors for their preferreds, so when all's said and done, they might own 4.4 mil shares, but they currently own 350,539 common, 97,111 Series B preferred, and 635,081 Series A preferred, and it's all valued at 4.663 mil. Are your numbers based on actual conversion ratios for the preferreds? .
I've been surprised how the market's faring recently for SAR vs its listed 7 1/2% senior note due 5/31/2020. At the most recent dividend rate, SAR has a current yield of 11.60%. The Baby Bond, SAQ now has a current yield of 7.98& and a yield to maturity of 9.23%. As a senior note, SAQ gets paid except under the most extreme circumstances. SAR's dividend only gets paid after SAQ is paid in its entirety and it's subject to change both up or down... Now granted the trend for SAR's dividends has been upwards, I'd much rather go for the interest payment of SAQ at a 9.23% YTM in this environment than reach for SAR. I am a holder of both and really think SAR is an undiscovered gem in the BDC world due to its relative lack of size but focus on quality tranches, but I'm very comfortable having 4 times more SAQ than SAR. Anyone else in SAQ?
Thursday JP Morgan, Barclays, BoA and Wells Fargo marketed an Istar bond issue priced as 6 1/2% due 2020 to refinance the IStar bonds coming due in 2016. The original issue was increased in size from $250 mil to $275 mil, so you would think the demand for the bonds at this price was well documented in advance. But the price of these bonds has already tanked to 7% +. That's over a 3 point drop. To my way of thinking, that's a badly run new issue, and a poorly run syndicate. The bad taste left in the mouths of new investors creates ill will for potential IStar debt buyers in the future at a time when Istar could use all the encouragement it can muster for potential bond buyers. That bad taste now associated with Istar new issue debt far surpasses the interest savings IStar enjoyed from JP Morgan's mispricing.... This is not how a well run syndicated bond issuance should go.... IMHO, IStar's underwriters did not do them any favors in the long run by apparently pricing this issue too high (too low in yield).
Well I'm not quite sure of your point or who's right hand and left hand you're referring to, however, there does seem to be a closer direct correlation of equity prices to bond prices in junk (meaning below investment grade, not junk junk) credits than in higher rated companies. Normally, I would say you're comparing apples to oranges when you say "but the stock went up when the bond went down," but in junk, the direction common takes does seem to have an impact on the direction the bonds take as all 6 IStar bond issues and the preferreds all did better yesterday following the common. That still doesn't negate the argument of a botched bond deal when bond investors in a $275 mill deal suffer immediate declines in the range of 3 points. Just like an IPO, a successful bond deal is normally one that leaves a little bit of meat on the bone for investors to enjoy, thus encouraging future investment in the issuer's securities be they equity or debt. The more likely it is that the issuer needs to return to the table, the more important it is for this to be done imho.