Thomas Kirchner's Blog (24)

Google's On2 Technologies Acquisition Is At The Mercy Of Merger Arbitrageurs

We live in an era of bumps in merger payments that the buyer thought had been negotiated, and Google (GOOG) is about learn this the hard way in its $106 million acquisition of On2 Technologies (ONT). As the stock market continues to rally shareholders whose companies get acquired are… Continue

Added by Thomas Kirchner on December 8, 2009 at 10:31pm — No Comments

Paul J. Isaac's Conflicted Role In American Community Properties Trust Buyout

The extent to which the buyout of American Community Properties Trust (APO) by Federal Capital Partners is flawed was revealed in the company's recent proxy filing. One of the unhappy shareholders, Paul J. Isaac, was given the opportunity to continue to own ACPT even after the buyout. The other shareholders will forgo the… Continue

Added by Thomas Kirchner on November 30, 2009 at 1:54pm — No Comments

Where's The Arbitrage In The New Merger Arbitrage ETF?

ETFs have been encroaching the turf of active managers for some time and are now taking head on hedge funds. The promise of hedge funds at ETF costs is very appealing but raises the inevitable question: can they do it? The upcoming IQ Arb Merger Arbitrage ETF (ticker will be MNA) is an example of one that is likely to fail.

The first thought is, of course, you get what you pay for. If this line of thinking has some validity, then alpha-generating talent is well worth paying 2/20 for.… Continue

Added by Thomas Kirchner on November 10, 2009 at 1:30am — No Comments

High Water Marks Bring Yet Another Bias To Hedge Fund Returns

Survivorship and backfill bias in hedge fund returns have been written about extensively. A recent article in Hedge Fund Alert drew out attention to yet another problem with the reporting of hedge fund returns. It turns out that last year's carnage has left so many hedge funds underwater that the returns posted for this year are not actually what you will earn if you are a new… Continue

Added by Thomas Kirchner on November 3, 2009 at 9:11am — No Comments

Harold Hamm's Hiland Buyout Has Upside

Hiland Partners It is doubtful that the buyout of the Hiland MLP (HLND and HPGP) by billionaire Harold Hamm will get… Continue

Added by Thomas Kirchner on October 26, 2009 at 12:27am — No Comments

Clarium's Peter Thiel Bearish On Innovation

Peter Thiel At Thurday's 2009 Investor Leadership Forum hosted by the Argyle Executive Forum and Capital IQ Peter a speech by Thiel of Paypal and Clarium fame linked future economic growth to innovation and technology rather than government… Continue

Added by Thomas Kirchner on October 19, 2009 at 10:04am — No Comments

Hiland: The Worst Deal Among MLP Consolidations

Among the many consolidations of MLPs (recall the mergers of Magellan Midstream MMP, Atlas ATLS or the pending Enterprise/Teppco EPD/TPP) one deal stands out as a particularly bad deal: the opportunistic squeeze-out of minority shareholders of… Continue

Added by Thomas Kirchner on October 14, 2009 at 11:00am — No Comments

American Community Properties Trust May Attract A Higher Bid

American Community Properties Trust Surprise, surprise! American Community Properties Trust (APO) is selling itself. And you won't even get market value for your shares: while ACPT trades between $8.35 and $8.50 the buyout will happen at $7.75.

The sudden sale at a discount to the market price… Continue

Added by Thomas Kirchner on October 7, 2009 at 12:40am — No Comments

The End Is Near For Wilshire Enterprises

Wilshire Enterprises (WOC) finally launched its $2 tender offer for 4 million shares, roughly half of the outstanding shares. It is a bad deal for shareholders and we anticipate that worse is to come because public shareholders will be minority holders in a firm whose management has a record of poor decisions, such as the refusal to sell at $8.50 to Mercury Real Estate Partners a few years ago.

The tender offer is the… Continue

Added by Thomas Kirchner on August 26, 2009 at 11:13pm — No Comments

Cash Shells: SPACs, MathStar, PetroSearch and Cadus

It has been a while since we first reported on SPAC liquidation arbitrage in January. The battles over MathStar (MATH) and PetroSearch (PTSG) has prompted us to follow up, as does our annoyance with the slow progress at… Continue

Added by Thomas Kirchner on July 28, 2009 at 10:46pm — No Comments

Bidding War Looming At Entrust If Shareholders Oppose Thoma Bravo Buyout

In a surprise move, private equity firm Thoma Bravo increased the price it is willing to pay for Entrust (ENTU) from $1.85 to $2.00 on Friday. We had forecast that shareholders would vote down the… Continue

Added by Thomas Kirchner on July 14, 2009 at 5:27pm — No Comments

Wilshire Enterprises' Future Decided This Tuesday

Wilshire CEO Sherry Wilzig Izak with Mina Otsuka, her brother "Sir Ivan" and friends (left to right)

The end of the first round is approaching in this years most underreported proxy fight, the battle over Wilshire Enterprises (WOC) between Phil Goldstein's Bulldog Investors and Wilshire's CEO Sherry Wilzig Izak. Two directors will be elected at Tuesday's meeting, and… Continue

Added by Thomas Kirchner on March 20, 2009 at 8:05pm — No Comments

Image Entertainment's Buyout Collapses, Yet Again

Image Entertainment Is Yet Another Busted Buyout Image Entertainment (DISK) went through a change in leadership over the last year with the retirement of Marty Greenwald, who was replaced by ex-COO David Borshell, but one thing hasn't changed: its bad luck when trying to sell itself.

Readers of… Continue

Added by Thomas Kirchner on March 4, 2009 at 4:40pm — No Comments

Dirty War Over Wilshire Enterprises

The battle over Wilshire Enterprises between Phil Goldstein's Bulldog Investors and Wilshire's (WOC) CEO Sherry Wilzig Izak is gradually growing into a full scale war, if not a jihad. Among a string of litigation, the shareholder meeting was postponed from this week to March 24th, giving management crucial time to beef up their defenses that ultimately will be futile. We have previously… Continue

Added by Thomas Kirchner on February 25, 2009 at 10:13pm — No Comments

The State Of The Hedge Fund World

Rosy forecasts were in short supply at the first annual Wharton Hedge Fund Conference. The shock of last year's worst-ever performance still reverberates through the industry. Career plans of students at Wharton are the best indication we have seen to date of how bad things have become for hedgies: one Wharton professor reports that last year, two thirds of his… Continue

Added by Thomas Kirchner on February 24, 2009 at 10:02am — No Comments

Société Générale's Jérôme Kerviel First Interview About EUR 4.9 bn Trading Losses

Interview with Jerome Kerviel on TF1

We have been eager for a long time to hear the other side of last year's mega losses at Société Générale (SCGLF), where a lone trader allegedly gambled away EUR 4.9 billion without anyone realizing it. Having worked at a French bank for a while ourselves, we have always felt that Kerviel's losses were possible only due to the… Continue

Added by Thomas Kirchner on February 21, 2009 at 12:11pm — No Comments

Mark Fisher: Keep It Simple, Stupid

Mark Fisher, inventor of the technical trading method ACD, sees this market as a pure trading market in which analysis does not matter. This was probably not what some of Wharton's students attending its first annual Wharton Hedge Fund Conference wanted to hear. After all, they have committed to spending a six figure amount on learning how to perform just that analysis. Fisher probably depressed also Wharton's… Continue

Added by Thomas Kirchner on February 21, 2009 at 12:00pm — No Comments

Tip For Roche: Pay For Genentech with Non-Cash CVRs

genentech logo In an unhappy reminder of January 2008, deals continue to collapse or see reductions in price. After the trouble at Rohm & Haas (ROH), the acquisition of Genentech (DNA) by Roche is another large deal officially on the list of downward revisions in price. On Friday,… Continue

Added by Thomas Kirchner on February 10, 2009 at 6:12pm — No Comments

SPAC Liquidation Arbitrage: How To Profit From Hedge Fund Redemptions

Among the least-damaged victims of the boom's unwinding are SPACs, which arguable were among the worst manifestations of the irrational exuberance driven by excess liquidity. Despite their relative resilience to the bust, their cash hoards coupled with limited life offer an interesting arbitrage opportunity with yields that, in some cases, reach well into the double digits.

SPACs are an outgrowth of blank check companies, which got a bad name when some were scams run through boiler room… Continue

Added by Thomas Kirchner on January 28, 2009 at 9:15pm — No Comments

In Defense Of Shareholder Class Actions

Former shareholders of Chaparral Resources should receive the proceeds of the settlement with Lukoil (LUKOY) in the next few days. The settlement checks were mailed on Monday, we were told by a lawyer involved in the case. We have written about Lukoil's shenanigans in the acquisition of Chaparral Resources before. As majority shareholder, Lukoil manipulated Chaparral to depress its stock price and acquire it at a low price. Shareholders filed a class action and are now, two years after the… Continue

Added by Thomas Kirchner on September 24, 2008 at 8:10pm — No Comments

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