Special Situations Archive

Experiments in Finance Tackles Tender Offers

Recently, one of the bloggers I follow, Experiments in Finance, decided to try investing in tender offers. A tender offer is a special situation that occurs when a company decides to buy back a number of its shares from shareholders for a fixed price or price range. I thought you might enjoy reading about her

Fat Pitch Take on Burlington Northern Santa Fe

As a follower of Warren Buffett, I learned about Berkshire Hathaway’s (BRK-A) acquisition of Burlington Northern Santa Fe (BNI) early yesterday morning. Most value investors probably were interested in learning more about how Mr. Buffett valued BNI. What is the intrinsic value of BNI? What kind of margin of safety did Buffett’s $100 per share

Special Situations or “Workouts”

As you might have noticed, I often talk about special situation investing here at Fat Pitch Financials. However, I just realized that I don’t believe I’ve ever defined what I mean by this term. What are special situations? I first learned about special situations while reading Joel Greenblatt’s book, You Can Be a Stock Market Genius.

This BUDs for Me

This evening I’m celebrating my homerun merger arbitrage hit with an ice cold Bud. My shares of Anheuser-Busch Companies (BUD) were cashed out this morning. I was expecting that I would be cashed out of this position rather soon ever since I saw last week that the Department of Justice cleared the merger with InBev (INBVF). This morning the Special Situations

Dangers of the Greedy Limit Order

As some of you might know, I’ve been playing the Constellation Energy Group (CEG) merger arbitrage opportunity. Berkshire Hathaway’s MidAmerican has offered to buy CEG shares for $26.50. The stock has bounced down as low as $15 and as high as $28.62. I sold my original position in CEG, but last Friday I couldn’t resist

Constellation Energy Group Merger Arbitrage Profits

The S&P 500 was down 4% today, but my merger arbitrage position in Constellation Energy Group (CEG) was up nicely. In fact, CEG shares climbed all the way up to the MidAmerican Energy Holdings offer price of $26.50. The stock was up on news that Berkshire Hathaway (BRKa) submitted its first regulatory filing to complete its

Fear, Uncertainty and Greed with CEG Merger Arbitrage

I must admit today’s market activity struck fear in my heart, but for a very specific reason. Constellation Energy Group’s (CEG) stock took me for a wild ride today. Thankfully, as a value investor, I knew that I had to keep my fear in check in order to profit. Let me share with you my story

Tender Offer Walkthrough, United Rentals

It’s been a while since I’ve shared with you the details of a stock tender offer. Stock tender offers with an odd lot provision are particularly attractive for individual investors since they allow holders of less than 100 shares to avoid proration that often occurs when tender offers are oversubscribed. Therefore, if you own less

Jaclyn, A Profitable Going Private Transaction

For the past few months I’ve held shares of Jaclyn Inc. in the Special Situations Real Money Portfolio. Members of Fat Pitch Financials Contributor’s Corner have been tracking my research on this company since it first announced its desire to go private back in December of 2007. Jaclyn proposed to go private by conducting a reverse split where 250 shares would

Questions About Tender Offers

I recently received an email that contained several good questions about stock tender offers from someone interested in joining Fat Pitch Financials Contributor’s Corner. I thought you might be interested in those questions and my answers to them. When acquiring an odd-lot following the announcement of a tender offer, what must be done next to ensure participation