Purchased Central Federal Corporation

On February 14, I purchased 200 shares of Central Federal Corporation (GCFC) for $12.39 a share. GCFC is another “going private” transaction. However, there is a slight bit more risk this time. Management is concerned that too many people are taking advantage of this deal (why wouldn’t we), so they have stated that they reserve the right to change the terms at any time. They just recently announced that instead of doing a reverse split of 1-500 they will be doing a 1-325 reverse split to save money. Shareholders that currently have less than 325 shares will receive $14.50 per share.

The confusion over the revised terms has depressed the price of the stock, so I decided to take advantage of the situation. With this latest purchase, my son’s ESA account is just about fully invested. I’ll keep you updated on how things turn out.

3 thoughts on “Purchased Central Federal Corporation

  • February 28, 2005 at 10:40 am

    This is fascinating. I just picked up a few shares myself as my own sort of experiment (not much, just 30).

    I’ve done some searching around and can’t really find anything on this topic.. is it safe to assume there isn’t much in the way of books or articles on this topic?

    Alexander Barbara

  • March 7, 2005 at 8:09 pm

    There really isn’t a book that focuses on these type of deals. Several value investing books discuss arbitrage and special situation deals, but not specifically going private deals.

    I discovered these going private deals after reading an article last year on the Motley Fool that discussed a company that was going private. Then I did some research on the net and found a message board that focuses on these deals. I experimented, much as you are, and I was happy with the results.

    Today, there was an article on companies going private. You can read it at http://biz.yahoo.com/rb/050306/column_lifting_1.html.

    Please share your own finding and experiences with these deals with my community when you receive your first cash payment.

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