I hear what you are saying, and if the track record of prior management means anything, you'd expect the dilution impact to hit only the denominator.
With an equity investor in the form of a company looking to benefit from a mutual partnership, I think this is the best possible outcome, even better than an outright sale at this point given my current valuation. I think you need to take prior multiples and valuations off the table until we begin to see execution.
I know there are some folks on here who have a much larger cost basis. This may be disheartening to them because they are looking to exit and they can close their position knowing they got everything they could. Mine's in the high 2's - as I entered right before activists came in to try and unlock value, and believe me - they have. It's about restructuring the business, setting up proper controls that didn't exist before, and putting that cash to work to generate income instead of bucketing rising water out of a sinking canoe.
This deal happens because Privet Fund, Marxe and Greenhouse, and Renaissance Technologies came in and wielded influence together and forced change. Some may flip their investment, with this deal, but I don't think all will. I still have a pretty decent sized position.
You're evaluting it as if the equity contribution evaporates on Day 1. ROE hurdle becomes higher, but I think the deal will allow the company to eventually retain earnings the contribution was at a premium to current market value of where the equity trades. You are right though about one thing - either the deal gets done or PFSW is no longer.
Thank you to all who have been in touch with me over the past few year. Together, we accomplished something special. While I didn't wind up using any of your names or information, several large investors were aware that long term shareholders were being taken advantage of by management. Together, we scored a huge victory for capitalism and challenged the status quo. You can't sit on your hands, collect checks, pay yourself, and expect to eat steak. You need to work hard build a business in the interest of its owners who put in their hard earned money to generate a return. Hopefully the next management team is focused here.
Easy money is Tom getting a huge loan from creditors and asking them to insert a covenant that causes interest payments to balloon to 29.99% or immediately called should any current member of the board by disposed.
SD is going to the moon. He stuffed a pinata full of SD shares that he granted himself and had Albert Pujols swing for entertainment at his nephew's birthday party. I saw more people fighting over the shrimp cocktail over the SD shares that were used as paper towels and napkins at the affair.
There was actually 13 but 3 fell out and stuck to my shoe. Looks like it was from a warrant exercise. Tom must have stopped by a gas station with no cash and dumped a few thousand shares to the attendant to try and pay for it. It's ok, he stopped by the corporate treasury ATM and took out a few thousand more shares free of charge.