NDS Group Makes Three

The third special situation opportunity that came to completion last week was NDS Group PLC (NNDS). This was probably a much simpler and less stressful play than Puget Energy and Meadow Valley. Let me provide you with some of the background.

NDS Group PLC announced back in September of 2008 that it was going to be taken private by News Corporation (NWSA) and two newly incorporated subsidiaries of funds advised by Permira Advisers LLP. Financing looked slightly complicated, but with News Corp backing, I wasn’t too concerned.

NNDS shareholders voted on January 13, 2009 to take NDS Group private by cashing out the ADR holders for $63 per share. On that same day, I decided to add 100 shares to the Special Situations Real Money Portfolio. I picked up the shares for $59.26 per share. The total cost came to $5,932.95, which I consider a maximum position size at this moment. As expected, shareholders approved the deal later that day.

Less than a month later (25 days to be exact), NDS Group stopped trading on February 4, 2009. I was cashed out at $63.00 per share, but it looks like $0.05 a share was withheld as an ADR fee. It is still unclear if I’ll be paid back for the five cent fee by the buyers. Nevertheless, I received $6,295 for the 100 shares on February 6, 2009. I appreciated being cashed out so promptly. The total return for this trade was 6.1%. If you factor in the 25 days, the average annualize rate of return for this trade came out to a nice 89%.

Looking back at all of the action in the Special Situations Real Money Portfolio last week, Puget Sound returned 34.6%, Meadow Valley returned 16.9%, and NDS Group returned 6.1%. The average annualized returns were 117%, 93%, and 89% for Puget Sound (PSD), Meadow Valley (MVCO), and NDS Group respectively. The total amount of profit for these three trades came out to $1,773.48. I’ve already put some of this capital back to work, which you can read about by subscribing to Fat Pitch Financials Contributors Corner. I might find out the results of that new investment tomorrow, so I might be able to add a fourth to this list real soon.

Now you know why I wasn’t worry about the weak performance of the Special Situations Port back in January. As I predicted in the January 2009 Special Situations Real Money Portfolio update, things have turned around nicely in February. As of the close of the market today, the Special Situations Real Money Portfolio is up 5.34% this year, trouncing the -8.4% return for the S&P 500. The more amazing number is the 24.67% internal rate of return since inception back in 2004. You can track the latest performance number for the Special Situations Real Money Portfolio by viewing the continually updated box in the lower part of the right sidebar on the Fat Pitch Financials.

Disclosure: I did not own shares of MVCO, PSD, NNDS, or NWSA at the time this article was posted.

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