1.15 a good price for those which is mostly what i been selling too- the sep 19 strikes me as good combo of low risk if deal does not go through and high return if it does. did sell some dec 20's though as those will maximize return via options if deal goes through quickly
all he needs is 51% voting yes, right? Which is 40% of the shares he does not own. You think 60% of the investor base will vote no? And given the polyglot nature of ebix (it has all the varied medical exposure, all the international exposure, in addition to the US insurance exchanges- that will not be a good fit for some "likely" bidders) I think the odds that another bidder emerges are likewise not high
a huge chunk of shorts have likely exited their positions, and we will know that before the go-shop period has ended. Assuming shorts are "smart" money then, looking at the drop in short interest will give a gauge of how likely the "street" thinks a "no" vote is, because for sure price will drop if shareholders refuse the buyout, even with its very low 7.5% premium over price at the time of announcement
some say the surge over 20 day of announcement meant street things another bid will come in, but that just have been a rush for the door by panicky shorts
and realistically, how high do you expect a buyout for? 20-30% premium would be reasonable and 20% premium means sale price of 22, a gain of $2. The share price could drop by that much upon a "no" vote.
my investment thesis is therefore that the deal goes through. I've been selling long-dated puts to maximize my return based on that thesis
the 12 m shares SOLD since offer is most likely by institutional investors moving on (institutions own ~90% of shares)
its more likely the BUYING was by shorts buying back their 10.6 m shares short, institutional arbitrageurs. Although its an interesting idea that GS is buying (every share they buy for under $20 saves them cash, although given they have already arranged for financing etc. is it even legal for them to buy shares now?
GS probably sees EBIX as a cash flow cow ( 51 m levered free cash flow ttm vs. buyout price of 820 m) which, given the leverage of the buyout, will generate a ROE in neighborhood of what , ~24%?. If so pretty great deal for GS
there is a 45 day shop around clause, so I doubt it will take only 3 months to close although i confess I was thinking like september, but if you are right that 2% becomes an annualized 8% if it closes aug 1. And, if you believe the sell in may correction is looming, then a relatively low risk 2% return sitting in EBIX is probably attractive, relative to the potential risk and reward of any other alternative investment. Better than parking in cash
be that as it may, it is normal for to-be acquired companies to trade a little under the acquisition price (like EBIX is now) up until closing (because of the risk of the deal following through- for example if shareholders do not approve) so holders who see more potentially rewarding investments will sell and move on
EBIX still a publicly traded company they have to comply with SEC regulations. Otherwise, they may get investigated :)
the reason to sell is because holding until the deal closes in Q3 only gives a 2.0% return if held to buyout at 20, which is small considering 1) opportunity cost and 2) the risk the deal could fall through if a majority of shareholders do not approve the deal
I'd guess the odds of the deal falling through are lower than a higher buyout offer, and a bidding war could reward shareholders nicely. And buyout premiums are usually higher than 7.5%, more like 20-30% which implies 22-24. But the percentage of acquired companies that end up getting bid up by second offers is low, right?
But can understand holding here, it's a low risk way to bet on a bidding war. But selling OTM puts puts more money in my pocket that holding out for 20, and puts it there now, with lower risk
all options , even long dated options with time value remaining, will stop trading when this all-cash buyout closes. Only ITM puts and calls wil have value when the deal closes. So selling ATM or ITM puts will yield all of the premium sold for, assuming the deal closes. Since he deal is slated to close Q3, selling DEC puts offers the most value; dec put spreads more so
I am tempted to do a ton of spreads on margin, seems too good to be true
I disagree with "50% chance to lose" statement also. My understanding of options in buyouts is that, if you own a put at closing it will only have value if the strike is above the deal price. so the seller reaps the entire premium. Since the deal is slated to close Q3, the best value is selling DEC (longest dated) puts with strike of 20- you harvest the most time and risk premium. sell puts with 18 or 19 strikes if you feel like the deal may fall through (hard to imagine, as GS knows their due diligence and Morgan Stanly advised EBIX's committee on the "fairness" of the offer)
correction volume is now 8.3 m above normal for today + yesterday, but still capitulation level. Guess the rip above 20 was the short covering. I'm surprised there was not more of a squeeze but no coincidence the latest short hit pieces came out today
if the deal closes at 20 you stand to gain 0.40
you could make a lot more by selling puts- the dec 20 puts selling for 1.25
unless a higher offer emerges, of course :)
ya I'm selling 18 and 19 puts on the drop after selling my shares this morning, since if the deal falls through (not likely, main resistance is likely to be lawyers who love getting paid by ebix shareholders), watch out below
for sure the shorts have been busy covering last couple days, short interest was 10.6 m as of 4/15, whereas the volume in ebix will be at least 10.5 m shares above normal last 2 days, must be some short covering
sale price seems like a ripoff given shares were well above up until november.
nevertheless I sold the last of my shares at 20.47, premium to buyout offer too good to pass up even with risk that another buyer MAY emerge
well there WAS a CCME board LOL but but ya I hear ya, no sense in comparing apples and oranges, if thats how you see it
anyways good luck to Yonge, I am an organic farmer and am a firm believer in the value of fulvic and humic acid amendments, I use 'em all the time
I don't see your post as pouring salt in wounds. Look at CCME, which was delisted and eventually became untradeable: those who sold as soon as they could upon resumption of trading after delisating, lost the least amount of money. becasue CCME shares kept falling until they were basically worthless
but that of course is worst case scenario, and i do not know the details as I have been out of YONG for quite some time, just stopped by because I was curious about the halt
anyways hope this turns into the buyout indicated - GLTA- but doesn't hurt to have a plan for all contingencies
short interest has been ticking down last 2 periods but its still pretty high, currently at 20 days to cover with the drop in trading volume recently. That short itnerest could be supporting the stock as any downdraft could be taken as an opportunity for shorts to start covering, as MELI has shopwn pretty good support here- shorts are not getting much of a return on their money
my covered call hedges are ticking away collecting time value, so I can't complain about a sideways moving stock, although i do wish I hadn't bought back those puts sold when MELI first ran to upper 90's. Oh well did get a little profit out of that
TWO IS distributing all fo their SBY shares, even though the 1-for-20 distribution ratio does look "convenient" but nevertheless, from the last annual report: "..TWO received 17,824,647 shares of common stock of Silver Bay at the initial public offering price of $18.50 on Dec 19 2012" (the exact amount to be distributed), which corresponds Silver Bay's statement in their announcement that TWO was distributing ALL of their holdings in SBY. Which is no surprise as TWO aslo stated in theri last ann report the intend to hold no investments in other REIT's
not sure I understand what you mean about the last 2 quarters- in each case, price fell at least the amount of the dividend during the day trading went ex-DIV. (didn't necessarily stay there long but then price wasn't stretched way above the 50 day moving average as it has during march's runup into this Q's dividend)?
agreed, which is why I presume the expected contribution of SBY shares being distributed to the drop in TWO share price ex-DIV will be SBY's price day prior
although in terms of TWO's recorded loss in book value by distributing the shares, it may actually be the last price reported on TWO's books which would be 12/31. But the closing price on 12/31 was 18.83, pretty close to current price of 19.10, so-barring a big swing i price in SBY between now and 3/28 when TWO goes ex-DIV price should drop ~1.27, which based on current 13.75 price should drop TWO to ~$12.48/sh, which was where price was (coincidentally???) before the March run that peaked at 14.02