Yesterday, I purchased 1,990 shares of Capitol First Corp (CFRC) for my son’s Coverdell ESA. Like ASA International, Capitol First Corp is planning to go private. They plan on conducting a reverse split and cashing out all shareholders with less than 2,000 shares. Capitol First Corp will pay out $0.18 per pre-split share to all those that are cashed out.
The announcement for this proposed going private transaction was on January 27. I tried to purchase the shares for $0.10 and then $0.11 with no luck last Friday and Monday. When I moved my offer up to $0.12 a share yesterday, the transaction finally went though. It can be rather difficult to purchase shares of these small companies with little trading volume. I think next time I’m going to make my limit order a bit more generous, so I can take advantage of lower prices shortly after these deals are announced.
I spent $250.75, including commissions, to purchase these shares. When the shares cash out for $0.18 a share, I plan making $107.45. I know that this is a pretty small amount of money, but look at the rate I’m getting. That $107.45 is greater than a 42 percent gain on my original investment. It is also likely that it will take less than a year for this transaction to be finalized. Therefore, my annualized rate of return will likely be much higher than 42 percent!