1 A Odd Lot Tenders

1/17/2016 Something
Odd Is Going On Kansas City Life Insurance Company (NASDAQ:KCLI) | Seeking Alpha
Something Odd Is Going On
Dec. 23, 2015 7:20 AM ET77 comments
by: Chris DeMuth Jr.
Disclosure: I am/we are long WLFC.
Summary
How to throw around your (lack of) weight.
Downside: not too scalable for institutions.
Upside: terrific IRR and risk:reward for individuals.
A bunch of nerds profiting from a loophole in tender documents
Preface
Before I begin, I should preface this by saying that this is a delicate topic. Many of the people who know it well would prefer
it discussed as little as possible. I am sympathetic to that preference, so I will try to be careful with how much I reveal to the
general public.
Odd lots
Sometimes it is an advantage to be small. Small "odd lots" of under a certain number of shares (typically one hundred)
occasionally have special privileges: they can be cashed out at a premium in some cases and they can avoid proration in
others.
Tracking odd lots
http://seekingalpha.com/article/3772616somethingoddisgoingon?li_source=LI&li_medium=liftigniterwidget 1/24
1/17/2016 Something Odd Is Going On Kansas City Life Insurance Company (NASDAQ:KCLI) | Seeking Alpha
The Edgar alert for SEC filings regarding reverse stock splits is the SC 13E3. Additionally, for the sake of some
redundancy, I have a Google Alert for "tender offer" and "repurchase." You can also set up Edgar searches for offer
documents with the phrase less than 100.
Norilsk Nickel
On September 28, 2011, Norilsk Nickel (OTCPK:NILSY) commenced a selftender at $30.60 for its American Depository
Shares (ADSs). Large tenderers got prorated, but there was no proration if you held only 1,000 or fewer ADSs. Unlike
merger arbitrage spreads, which tighten after announcements, these stay wide because large holders sell to get down to
1,000 shares while nonholders buy to get up to 1,000. The opportunity remained until a few days before the offer closed
(allow for the requisite number of days for shares to settle so that you are the holder of record).
But why did this opportunity exist? These two feuding Russian oligarchs:
Oleg Deripaska Vladimir Potanin
They hated each other and were angling to dilute each other's stake. Cleaning out the ADSs was just a small part of the
overall process.
Modest scaling
To scale this type of opportunity, the best tactic is to participate across accounts. In my experience, in addition to your own
account, a family of four can set up accounts in at least twentyfive separate entities between individual accounts, trusts,
and so forth. In the case of Norilsk Nickel, such a strategy raised one's upside from about $10k to over $250k. This
investment violated the old "don't get between two feuding Russian oligarchs" rule. Happily, the process was smooth and
quick and Norilsk Nickel paid as per its offer.
What if you have children or entities without the requisite capital to execute this investment, which in this case demanded
$20k each? One solution is to have separate accounts set up for each and to lend them the money at the AFR. That rate is
currently 0.75%. At the time, it was 0.16%. So, the math works like this: for each of twentyfive entities loan $20k, charge
$32 in interest, invest $20k, collect $30,600 in cash from Norilsk, have the debtor pay off the $20,032 loan with the
proceeds. They keep the $10,568 profit. You gain $800 in interest in addition to the $10,600 in your own account for a gain
of $11,400, and various beneficiaries and related parties within your group gain an additional $264,200. Total original
invested capital was $520,000. Total time elapsed was one month. Total profit was $275,600.
In terms of multiple accounts, different people will structure things in different ways. Here is one strategy for getting to
twentyfive accounts:
Oddlot Syndication
1. CD (my individual account)
2. ETD (my wife's)
3. C3 (my son's)
4. EC (my daughter's)
5. CD IRA (my children have no IRAs; they will start earning allowance incomes at age 5; hard to
justify paying them enough before then)
6. ETD IRA (I employ her)
7. CD+ETD partnership
8. C3+EC partnership
9. CD+C3 partnership
10. CD+EC partnership
11. ETD+C3 partnership
12. ETD+EC partnership
13. CCD, C3 + EC partnership
14. ETD, C3 + EC partnership
15. CD, ETD, + C3 partnership
16. CD, ETD, + EC partnership
17. CD trust
18. ETD trust
19. C3 trust
20. EC trust
21. CD+ETD trust
22. C3+EC trust
23. ETD+C3 trust
24. ETD+EC trust
25. LLC that manages real estate
I set these up with a masterfeeder structure so that I can trade once on their behalf. Also, several of these but not all are
limited partners in my general investment vehicle, Rangeley Capital. The key is that each entity has to be separately
registered. Also, two more quick thoughts on implementation: make sure that you do these in time to have settled shares
and that you are the holder of record when odd lots are cashed out. Want to be 100% safe? Then take physical possession
of your stock certificates.
Oddlot provisions are free options
One need not tender. Two cases where I declined included Taro Pharmaceuticals (NYSE:TARO) and Willis Finance
(NASDAQ:WLFC). Both tendered for shares at deep discounts to intrinsic value. I mentioned the TARO opportunity but
holders that declined the offer are probably glad that they did:
More recently, Willis conducted a selftender with an oddlot priority, but the equity is worth more than the cash being
offered.
The happy history of investing in odd lots
These are not too scalable. Even with tactics that once can use to open multiple accounts, this is not something that would
make institutions much money. However, they are also among the best risk:rewards available to individual investors, and
they can have great IRRs, too. Oddlot tender offers were among my favorite investments throughout high school and
college.
In 2002, SarbanesOxley made it more expensive and onerous to be a public company. Thus more and more small public
filers used the process (called a reverse and forwardstock split) to cash out enough shareholders that they could then
avoid the high cost of SEC compliance. In 2010, DoddFrank made it even more expensive and onerous to be a public
company. Following round after round of ever increasing regulatory burdens, it is nearly impossible for any small company
to justify public registration.
The unhappy history of writing about odd lots
Having invested in oddlot tender offers for a few decades, I was excited to share this opportunity with the world when I
started writing on Seeking Alpha. The sharing part is what got me into trouble. I wrote about an exchange offer with an odd
lot provision that took a weekandahalf to execute. Hedged, it was worth a 10% return and unhedged it paid out a 20
25% return. So far so good. The trouble began when I published parts 2 and 3 of the series. The attention led companies to
pull oddlot provisions and led oddlot old hands to complain that I was wrecking the good thing that we had going. They
were right to complain. The problem is that if too many people try to take advantage of these provisions for profit, the
expense becomes too high for the companies that offer them. Critics were getting pretty unhappy with these articles,
I'm really at a loss for words why they think these peanuts are more important than
keeping these opportunities alive. Is it shortsightedness? Egoism?
Another complained that,
a bunch of nerds are profiting from a loophole in boilerplate tender documents.
But is there a way to strike a balance?
Sifting the World
I wanted to be able to scale up this and similar opportunities bigger and better than I could do on my own with a single
account (or, as described above, twentyfive accounts). But I did not want to overly dilute anyone's returns (especially my
own). So what is the right balance? It was clear that 25 was too small and the 4,843,410 people on Seeking Alpha was too
big. I determined that the right size was 1,000. I set up a membershipbased community within Seeking Alpha called Sifting
the World. We would limit access to 1,000 members. I would keep my best ideas within that community of investors. The
ideas flow both ways as of today, many of my best ideas come from fellow StW members.
In addition to oddlot opportunities, we research and discuss other types of value and eventdriven opportunities.
Categories that I am particularly focused on include mutual conversions, merger securities, and squeezeouts. The
commonality is that each involves situations where the price system frequently fails to efficiently price their value. Of
course, it is up to each investor to adequately discount and size the risks, but these categories are good starting points for
our research.
Kansas City Life
It is the end of Sifting the World's first calendar year. Membership dues (currently $1,000 per year) are rising to $2,500 per
year in 2016. However, there are two caveats worth mentioning:
1. Founding members (those who join in 2015) can permanently lock in their rate, even after future increases in dues.
Founding members can join for ten more days.
2. Many members took advantage of our idea specifically offered to pay for membership a 249share investment per
member in Kansas City Life (KCLI).
This position was first disclosed in August. Members purchased positions at prices between $45.60 and $47.25 per share.
If you bought 249 shares at $47.25, the company's intent was to buy out your shares for $52.50 per share for a total of
$1,307.25 per account. This was a doubledigit return between now and the end of the year at a low risk. While it is not
scalable, it is a great risk:reward (as far as the risk, I am at worst indifferent to paying 69% of book value for this sensible
little insurer) and a decent IRR (>25% annual net return). You would clip one last $0.27 dividend for an additional $67.23,
which goes a long ways in Kansas City.
On Wednesday, December 16, the company cashed out small accounts holding less than 250 shares for $52.50 per share.
StW members made an average of over $1,500 (totaling over $600,000 of profit), or a 50% return on their memberships
from this single idea. The IRR on capital invested was over 30%. While most of our ideas are far more scalable, this one is
a modest example of the IRR and risk:reward that we seek before we invest. On Thursday, December 17, KCLI became
one of StW's exits, along with ideas such as Danaher (NYSE:DHR) and Digirad (NASDAQ:DRAD) (whose share prices
materially converged on their intrinsic values) as well as Magnatek (NASDAQ:MAG) and Informatica (NASDAQ:INFA) (both
of which were bought).
The right balance
So far, oddlot tenders have been an important part of StW. While the reaction to publishing these ideas for the general
public was justifiably negative, the reaction within our membership community has been outstanding. One commented
that,
When Chris says that he is looking for misplaced bets, he really means it. And that can
be anything from 10% off gas, or $100 in an odd lot situation to a 40% plus return on a
stock like Magnetek (which just got bought out).
In the months since I have joined, the ideas that I have acted on have already paid for
my subscription for a decade. So it really is not a question of whether this is worth the
money or not.
Moreover, I have complete confidence that my returns are not a fluke. I believe that the
ideas from STW are truly unique, and actionable. Because of that, I expect to continue
to benefit for as long as Chris keeps this service going.
But it isn't just Chris's ideas that you are privy to when you join STW. You also get ideas
from other members, and Chris's extensive network of friends. Once you join, you'll
realize that Chris has access to some of the most brilliant minds in the small cap space.
We will continue focusing on oddlot tenders and other such opportunities in the New Year. You would be welcome to join
us.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of
the risks associated with these stocks.
Additional disclosure: Chris DeMuth Jr and Andrew Walker are portfolio managers at Rangeley Capital. Rangeley invests
with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through
corporate events. In order to maximize total returns for our investors, we reserve the right to make investment decisions
regarding any security without further notification except where such notification is required by law.
Comments (77)
Felipe Monteiro de Carvalho, Contributor
What is a "selftender"? Norilsk Nickel was trying to buy back all ADS or doing something else?
23 Dec 2015, 08:49 AM
Chris DeMuth Jr., Contributor
Author’s reply » Felipe Monteiro de Carvalho, they were tendering for some but not all of their
own securities (large holders were prorated; small holders were not).
23 Dec 2015, 09:02 AM
Felipe Monteiro de Carvalho, Contributor
What does "prorated" mean?
23 Dec 2015, 09:15 AM
Author’s reply » In this context, it means that they are cut back proportionately, Felipe
Monteiro de Carvalho.
23 Dec 2015, 09:26 AM
AJR415
Thanks for sharing. These are especially of interest to those of us with relatively small amounts of
capital. Now don't ever reveal this secret again...
23 Dec 2015, 09:14 AM
Author’s reply » Agreed, AJR415 (at least outside of StW).
23 Dec 2015, 09:26 AM
galicianova
"along with ideas such as Danaher (NYSE:DHR) and Digirad (NASDAQ:DRAD) (whose share prices
materially converged on their intrinsic values)" Have i read correctly that That DHR's current price
converged to its intrinsic value?? the price in mid july when the article about DHR appeared was
pretty much the same. Am i missing something? Chris, please clarify. Thanks!
23 Dec 2015, 09:19 AM
Author’s reply » galicianova,
Yes. It is up double digits from when it was first disclosed on StW. I am happy to clarify, but am
also really trying to focus my efforts on StW so hope that you might consider joining. I get a lot
of questions from you and do my best to answer but hope that it would be worth it for you to
become a member.
23 Dec 2015, 09:29 AM
galicianova
Comrade Chris, just subscribed!
23 Dec 2015, 04:07 PM
Author’s reply » Welcome, galicianova; I am delighted to have you as a member. Thanks for
joining. I hope and expect that this will be a long and profitable future on StW for both of us.
23 Dec 2015, 04:10 PM
galicianova
The feeling is mutual. Amen!
23 Dec 2015, 04:16 PM
jbzw
Chris, thanks for sharing your multiple account strategy. Its too bad individual stocks cannot be held in
529 accounts which would add to your list. Congrats on passing 13,000 followers.
23 Dec 2015, 09:59 AM
Author’s reply » Thank you very much, jbzw.
23 Dec 2015, 10:02 AM
jacobtr
So just to clarify, IRAs count as separate holders, right? What if you have a Traditional and a
Roth IRA? Is that two or just one?
23 Dec 2015, 08:02 PM
Author’s reply » They just need to be registered separately (separate brokers help).
23 Dec 2015, 08:05 PM
jacobtr
Thanks, Chris.
23 Dec 2015, 08:09 PM
Brian Harper, CFA, Contributor
No, but you can do an Educational IRA, or custodial acct, and then as the acct gets over a
certain amount, transfer the overflow to a 529.
24 Dec 2015, 11:04 AM
jacobtr
Thanks, Brian.
24 Dec 2015, 11:33 AM
Windy Hill
Christotally offtopic but I have to say I love the Dali pic, which reminded me of one of his quotes:
http://bit.ly/1OiX6Mo
23 Dec 2015, 10:13 AM
Author’s reply » That is a great one, Windy Hill.
23 Dec 2015, 10:19 AM
Justin Polce, Contributor
Chris,
Great insights, as usual. Your opportunistic candor is both useful and refreshing.
23 Dec 2015, 10:22 AM
charlesre
Chris,
I started participating in odd lot tenders in back in 2004. I was pretty active with it until the financial
crisis hit and the tenders dried up. Norilsk Nickel was not a typical position.
Here's a summary of my actual results from July 2004 to March 2007 (I compiled this for a presentation
in 2007).
63 trades (56 profitable, 7 unprofitable)
3.5% average return
16.1 day average holding period
$2,800 average transaction size
$95 average profit (net of commissions)
I was also participating in reverse splits and going dark transactions. They were more profitable but
riskier. Longer holding period and larger raw return. They were also riskier and the deals collapsed
more often, especially as word spread on the internet.
23 Dec 2015, 10:42 AM
Author’s reply » Thanks for the data, charlesre.
23 Dec 2015, 10:44 AM
charlesre
Any time. It's all sitting in a spreadsheet somewhere.
23 Dec 2015, 11:18 AM
csv26
I think the above comment on DRAD is crushing it today. Down 7% already.
In any event, if I had $1000 to spare, I would join your service, Mr. DeMuth. Unfortunately, medical
students aren't typically so flush. I hope that by the time I've the means, your rates haven't been hiked
to yet again eclipse my finances.
Best,
Chris
23 Dec 2015, 10:43 AM
Author’s reply » While they are going up by 2.5x, the ability of MD's to pay is probably over
2.5x that of med students. Best wishes for every success in your studies, csv26.
23 Dec 2015, 10:46 AM
billinga
Chris,
Merry Christmas and Happy New Year! I am looking forward to 2016 and Sifting the World. Hopefully
we will see some Mutual Conversion news soon. It seems like 2016 will be dry for that so
far...thoughts? Also, what do you think about putting in a bid the night of a merger announcement?
That just worked for me on Fox Chase.
I have been doing Odd Lots for about one year now thanks to the recommendation of a friend. He also
recommended "You Can Be A Stock Market Genius" which you also recommended. It was a great read
with good examples. A bit dated, but still true. A question on the multiple account strategy...do the
accounts have to be at separate brokers? I have heard stories of people not getting Odd Lot treatment
if they had multiples at the same broker.
Thanks,
Bill
23 Dec 2015, 11:14 AM
Author’s reply » billinga,
We will have a few 2016 conversions. Separate brokers or take physical possession.
23 Dec 2015, 11:30 AM
The Protagonist, Contributor
Chris,
How does one take physical possession? Do you buy via the broker and then have to ask the
broker after owning to mail you the certificates?
25 Dec 2015, 04:55 PM
Author’s reply » The Protagonist, Yep.
25 Dec 2015, 06:52 PM
user 123
Interesting read. To me, the bottom line numbers are:
Invest in a small cap stock at $47.25 per share around August. Hope Kansas City Life Insurance's
(KCLI) sticks to its promise to delist from NASDAQ, winning a shareholder vote for same. Involved is a
1:250 reverse split of shares. More at http://bit.ly/1OiZtyO and http://bit.ly/1OiZtyQ . Fractional shares
are normally paid as cash. KCLI states its intent to pay $52.5 per share in these fractional share
buyouts. No guarantees.
Before transaction fees and counting one dividend, this will result in a return of ($5.25+$0.27)/$47.25 =
11.7% over five months. This is equivalent to an annual return of 30%. The ostensible two catches are:
(1) you'd only learn of this by buying a STW subscription for $1000 per year (or using Chris's generous
sharing of knowledge and a lot of study?); and (2) folks could buy only $11,765 (= $47.25*249) in each
account. I am an ordinary, older person. I have three accounts (an IRA and two different brokerages). I
could have netted:
$11,765*3*0.11 $1000 cap gain tax =
$3,882 CG tax.
Arguably Chris would share other suggestions for the $1000 annual subscription fee to his "Sifting the
World" service.
The risk is that this deal could have collapsed. How often do these deals collapse? I do not know. Chris
is clear that word is kinda getting out about these deals. Typically word gets out, everyone starts taking
advantage of the situation, and they are no longer lucrative deals. OTOH, this appears to be a deal that
only noninstitutional investors can take advantage of, given the 249 share limit. I imagine big funds
with high labor costs would find the cost benefit to be too small, even if it were a sure thing.
If I were given a choice between putting some $30k into either (a) STW tips; or (b) an MLP, BDC, or
mREIT, I would buy the subscription to STW and follow some of its tips, assuming they are similar to
the KCLI tip from August. How much of my portfolio would I consider allocating to these tips? 1%, tops.
If one insists on playing the markets via STW, MLPs, BDCs, and mREITs, or any shortterm trading,
consider this a plug for Chris DeMuth's STW subscription service.
Other food for thought, from where I am sitting: I have been reading a couple of books about the fraud
Bernie Madoff perpetrated for decades. What catches my eye in particular is the number of men,
working in the financial industry, seeking legal strategies for playing the markets. Mostly it appears they
make their money not from the strategies but from commissions and other fees for selling the
strategies to the public.
Thank you for sharing this, Chris DeMuth. It's the best SA read I've had all month.
23 Dec 2015, 11:41 AM
Author’s reply » Thanks for the analysis, user 123.
23 Dec 2015, 11:49 AM
jbzw
User 123, I agree that a membership to StW has been an excellent investment. Regarding the
KCLI odd lot, Chris did his homework. The below 250 shares was only around 5% of the shares
and the price was below book value. Nothing is a sure thing, but Chris and his crew always sift
these possibilities for great risk/reward opportunities. Odd lots are not odd to those who review
them carefully. Good luck to all of us.
23 Dec 2015, 12:17 PM
New Capital, Contributor
Calling KCLI a 'good risk/reward' retrospectively is misleading. This going private transaction could
have ended in exactly the same way as HKFI (where transaction was cancelled and all of odd lots got
burned badly). Therefore, ex ante the risk was really quite big.
Also on your new rate for 2016, its absolutely fantastic if you are able to attract new readers at this rate
and congrats on that! basically StW subscribers would be paying for your subscription more that for
the whole of SA Pro.
However, when it comes to all the odd lot opportunities that you stress in this article, there are way way
cheaper services to track these (e.g. http://bit.ly/1FVDjzk) and they charge $19/month instead of
$200/month you have planned.
23 Dec 2015, 12:17 PM
valueinvestor5102
New Capital, http://bit.ly/1IqIJty is even cheaper ($15/month) and covers the same
opportunities.
23 Dec 2015, 12:37 PM
galicianova
This may be correct, but so far from what i have seen being published here, this is and will be
only a very minor aspects of STW spiel. am i mistaken?
23 Dec 2015, 12:50 PM
Author’s reply » You are not mistaken, galicianova.
23 Dec 2015, 12:52 PM
user 123
New Capital, thank you for commenting. Reading about the (ultimately cancelled) tender offer
from Hancock Fabrics Inc (HKFI) balances nicely what's written here about KCLI. Summary of
HKFI's tender offer:
May 2014 Hancock's cap is around $2 million dollars. Hancock announced the costs of being
a publicly traded stock were too high; it was considering going private via a 1:1000 reverse
split; and it was considering paying $1.20 per share for positions having 999 or less shares.
The market price at the time was about $1/share.
May through July 2014 Lots of folks buy 999 shares of HKFI costing them about $1000, in
hopes of ending up with $1200 in August. The clever folks do this in multiple accounts, along
the lines of what Chris DeMuth proposes above.
August 2014 Hancock cancels the offer. Its main reason for doing so? The number of
shareholders owning 999 or less shares had shot up, and it could no longer afford payment of
a $1.20 per share to all shareholders holding 999 or less shares. The stock price had fallen to
about $0.85/share. Note that only about 2000 shareholders would hypothetically be necessary
to own all the shares available. A little publicity was all that was necessary to cause this deal to
implode? (I bet Chris knows this and considers it in his analysis.)
Dec 2015 HKFI is trading for about $0.07/share. Those attempting to benefit from the odd lot
offer lost about 15% of their principal if they sold after the August 2014 announcement. If they
held the stock to today, they have about a 90% paper loss.
Interesting before and after discussion of HKFI here: http://bit.ly/1Ir4c5u . As Chris pointed out,
folks who are wellversed about these odd lot trades, and invested in particular ones, get miffed
when the word is spread. I would say the risk to their investment rises as publication of the
opportunity increases.
Typo in my first post above: In my three accounts, I would net $2882 less CG tax.
This topic is welltreated on the net. I am not interested in investing this way, even a little bit,
but I am curious about the sort of personality that goes after these tender offers, along with
those selling their research on which ones look good. If one has a high net worth, I tend to think
these do not pay all that well, in the aggregate. For retirees, one is probably better off working
a parttime job. One can mostly sock away the earned income from a parttime job in an IRA.
Chris, sorry for the repetition in analysis above. This was still a great read. I am enjoying the
comments. Even if I do not want to become involved in this method of investing, to me it's a
bona fide "seeking alpha" discussion.
Care to share: Did you actually make the investment in KCLI in 25 accounts in which you were
involved (by family or business relations, all above board, of course)?
23 Dec 2015, 02:43 PM
MtBudmoreView
NC, I look at cost proportionately and on a weighted basis. I consider the number of stocks and
potential, per the cost, and then the service level which became an analysis of contrasts which
helped me associate a cost/ value relationship. I need to like the venue. It needs to be
understandable, and it must generate a positive result I can measure. I have been impressed
with the continued improvement of the service. I too, am always looking for ideas. Thanks for
the comment Have a great holiday and new year.
23 Dec 2015, 09:28 PM
Martin Keck, Contributor
Did anyone have a problem due to holding KCLI in street name?
23 Dec 2015, 12:22 PM
hopeful~
Schwab says if you bought on 12/16, your stocks won't be purchased for 52.5
23 Dec 2015, 02:32 PM
gg01
Bought through Merrill edge on 12/15. Same outcome no cash purchase. Instead got
exchanged for the new KCLI which is trading a lot lower.
23 Dec 2015, 06:38 PM
azbroker
"The key is that each entity has to be separately registered." Chris, you bring fresh perspective to
niggardly chiseling. But where do you register all of those accounts and at what cost? If you do it at IB
through an advisor account the cost is $10 per month on less than $100K in deposits. So $10 x 25
entities x 12 months = $3000 annual cost to maintain. Entity registration and annual renewal is another
cost center, $200 per entity per year for a registered agent and renewal fees. Just wondering how you
think about that and the cost and organization around all that paperwork?
23 Dec 2015, 12:29 PM
Author’s reply » I am lucky to have plenty of help with organizing, azbroker, as well as help
negotiating deals that make sense for us.
23 Dec 2015, 12:53 PM
tkswett
Thanks Chris for the daily education you provide on StW and especially for the mispriced
opportunities! Happy Holidays to you, your family and StW members!
23 Dec 2015, 03:48 PM
Author’s reply » Same to you, tkswett.
23 Dec 2015, 03:49 PM
984591
$1,000 annual membership fee for 1,000 members = $1 million in fees a year. Raising that to $2,500 in
2016 increases your net to $2.5 million. I think writing about these deals sounds a lot easier and more
profitable than investing in them.
23 Dec 2015, 06:09 PM
jbzw
984591, your conclusion is unsupported. Chris has limited membership to 1,000 members and
that limit will be reached in short order. He has also promised that the initial membership fee
will not be raised for subscribers who join this year. As a result, the gross will not be 2.5 million.
Obviously, the fees are not net profit. There are huge expenses in providing information to
members. Sending administrative lawyers to monitor public service commission meetings (e.g.,
POM, CLN) is not inexpensive, and subscribing to professional services is really expensive.
Price access to Bloomberg. Staff support is also not cheap. Profession services are not free,
etc. Your assumption that fees are without cost is inaccurate. Chris does not make his living
writing, but doing. And he has shared his expertise with members and indeed public readers.
StW is a great resource for folks who want to succeed in the market. I know. I joined on the first
day and recouped the cost of the subscription in the first week or two. If you are serious about
investing, you might give it a chance.
23 Dec 2015, 07:43 PM
Author’s reply » As Charlie says following Warren, I say about jbzw that, "I have nothing to
add."
23 Dec 2015, 08:07 PM
sheldond
Jzbw,
Big fan of the work Chris does. But it is obvious Chris will make money any way he can
including 100$ arbitrage. So if you don't think STW adds to the bottom line I suggest you have
more kool aid.
That doesn't mean it isn't worth it but it means you need to examine it objectively for your
benefit before making a decision.
I am against subscribing to services as I believe they change an independent investor into a
follower. Plus almost all of these opportunities are posted elsewhere for free but you have to
actually find them. This is no secret trading club.
I have seen a number of best ideas blow up in people's faces including one of Chris's that I
made a killing off of by trading sentiment. I am ashamed at the naïveté of seemingly competent
people.
@chris I wish you all the success in the world. It is your effort and commitment driving your
success. You employ multiple modes of discourse in your analysis. You are incredibly talented.
The key isn't what Chris buys it's understanding his mindset and how he looks for bargains.
This he has given away generously for free. It is up to you to use it.
Thanks for still sending a few crumbs out into the universe.
2500 a year adds up quick... Very likely you fill stw this year. Quite an accomplishment.
Best,
17 Jan 2016, 11:08 AM
DMFBio
Chris, thanks for sharing this is a great way to take advantage of being small! I am on the brink of
subscribing to StW, but have a question regarding being small. Can you give me a rough idea of what
percentage of the ideas you share are only available to 'qualified investors'? How many will be helpful
to those with only $50100K of investable assests? Thanks in advance.
23 Dec 2015, 11:54 PM
Andrew Walker, CFA, Contributor
I'll jump in here if that's ok. I cannot think of a single idea we have posted on StW that was not
actionable for small, nonqualified investors. Almost all ideas are single name publicly traded
stocks, which are accessible to anyone with a brokerage account. In fact, many ideas (like odd
lots and reverse splits) are better suited for smaller investors.
24 Dec 2015, 11:16 AM
Author’s reply » "I have nothing to add." Charlie Munger
24 Dec 2015, 11:27 AM
AJR415
I'm also considering joining.
You'd only have to earn 2% on 50k to recover the 1k cost. For me, the required return
percentage is a bit higher because I have even less than 50k to invest, but I think I'd learn a
thing or two as well.
28 Dec 2015, 03:31 PM
Author’s reply » We would be delighted to have you as a member, AJR415.
28 Dec 2015, 03:45 PM
grisly_atoms
Chris,
There's something happening here
But what it is ain't exactly clear
There's a man with a hedge fund over there
Telling me I got to beware
I think it's time we stop
Hey, what's that sound?
Everybody look what's going down?
24 Dec 2015, 01:58 AM
MtBudmoreView
again?
24 Dec 2015, 03:29 PM
vanduppe
Chris, personally did the Norilsk trade myself a couple of years ago, now i am looking @ Alstom in
France, share buy back @ 35 EUR middle of january and shares currently @ 27.50 EUR, any opinion
on this one ??? regards.
28 Dec 2015, 08:21 AM
Author’s reply » It is a beauty, vanduppe.
28 Dec 2015, 08:44 AM
galicianova
"share buy back @ 35 EUR middle of january" could you provide a reference
please??
28 Dec 2015, 09:10 AM
galicianova
i found it. thanks for the tip. just bought some
28 Dec 2015, 09:20 AM
Clint Edgington, Contributor
any way for US Holders to participate?
28 Dec 2015, 09:25 AM
bigdemeter
Their website says in bold letters the offer "will not be opened to holders in the United States"
so I think it will be pretty difficult for most people to participate. I'm not aware of any easy
workarounds to that. Perhaps you could give it a shot if you have an offshore account.
28 Dec 2015, 08:33 PM
Brian Harper, CFA, Contributor
Interesting idea. Bouygues owns roughly the same amount that they are tendering for and have stated
their intent to tender, so it will certainly be prorated.
28 Dec 2015, 10:49 AM
galicianova
well, 1/2 cow is still much bigger than a whole hen even in a metric system
28 Dec 2015, 03:53 PM
vanduppe
i still find the discount between 35 offer and current share price big...i know some tax issues, for
example Belgian investors will be taxed are an issue...so no position yet, still doing my own due
dilligence so to speak, but any input welcome.
28 Dec 2015, 11:09 AM
Martin Keck, Contributor
There is also a small french transaction tax when purchasing shares imho. Just that no one wonders
what this is. The Europeans always have nice anti shareholder ideas :)
30 Dec 2015, 11:49 AM
GSUN Capital
Chris, thank you for your insightful article. I have several questions if you can help answer something
who is trying to understand:
Your odd lot syndication includes:
2. ETD (my wife's)
3. C3 (my son's)
4. EC (my daughter's)
What exactly is ETD, C3, and EC? and how can I create them as well?
Your multiple partnership structures allow you to create multiple entities. I noticed that the partnership
structures were with various different accounts. Can I use the same accounts for multiple partnerships?
For ex: Multiple partnerships that only has me and my wife's acc in them. Wouldn't that work as well?
Then theoretically, I can have unlimited accounts. Thank you.
30 Dec 2015, 11:06 PM
Author’s reply » GSUN Capital
ETD: the longsuffering wife. The others are various children. I found the first in school and the
various others showed up later. I don't think that the alternative structure would work as the
brokerages would still see the same account and would not give it oddlot treatment.
31 Dec 2015, 04:02 AM
HaroldRamis
Keep promoting this to the masses and you may well blow the whole deal.
Hey, If i was making 2.5 million a year , I'd risk it too.
31 Dec 2015, 02:57 PM
Author’s reply » You are right, HaroldRamis; this is the last time. 100% within StW only going
forward.
31 Dec 2015, 03:02 PM
jbzw
StW members can't wait!
31 Dec 2015, 03:28 PM
Merchant of Death
Here's to Chris for his overwhelming successful "Rookie" year on StW Congratulations on an
amazing inaugural year with StW
You had many amazing, on point ideas right out of the gate for 2015 that I'd love to know what
you'll be doing for an encore!
Please note not that I'm complaining I'm at less than 1% cash from having had so many
actionable (and quite successful) ideas of yours from which to choose and invest in.
And I'm especially grateful that you closed StW and that a certain angry, bitter, pennypinching
miserly knowitall who names himself after a deceased movie director will NOT be along to
enjoy the fruits of your StW labors. Besides, this guys seems to know much more than
everybody else within the StW group. The only value that Hal.ram. would've brought to the
table would've been to hear his constant complaining. Instead, we can now simply look forward
to listening to his w[H]ining regarding the incredibly Sour Grapes that StW had/has to offer. In
fairness, he is amusing (without intending to be so), but I can only digest his b.s. in small, VERY
SMALL doses. Anyway, I'm glad that this bozo is out of StW for good.
All the best to you, Chris, for your amazing StW ideas, but more importantly, all the best to you
and your wonderful amazing family. You're lucky to have such great looking children and
they're lucky to have a dad that's there to teach them what nobody else will regarding
investments, wealth management, "sifting the world" for investments, and teaching them the
value of being time insensitive in order to capitalize off of those that need liquidity here and
now. And I'm sure that even the "long suffering" Mrs. DeMuth is a really cool gal whom you're
very lucky to have and viceversa.
The key to enjoying life is to enjoy each other's company, and to do those things on your
"Bucket List" now, or sooner rather than later, before time catches up with you as much it has
with me and bride of 24 years.
Any way, to a wonderful, exciting, prosperous 2016 for all of us StW's!
MoD, aka David from Dallas
04 Jan 2016, 03:35 AM
blucrab
SORRY JUST TELL US THE 'BESTSHORT' YOU PLAYED LAST WEEK!
17 Jan 2016, 08:55 AM
Author’s reply » blucrab, YINN: http://seekingalpha.co...
17 Jan 2016, 08:57 AM
Chris Lau, Contributor
Ha, Chris, I bested you by two points on the short AVXL idea :)
http://bit.ly/1PzujnY
KBIO short idea even better, but that's not a trade that's available.
17 Jan 2016, 10:15 AM
HighOnDividends
Very interesting article Chris.
So if I understand this strategy correctly, you have to register your shares? You can not leave them in
street name?
If the above is true, then do not most brokerages charge up to $50 PER EACH ACCOUNT, to register
shares in the beneficial holder's name? Mine does. Now multiply that by the number of accounts you
are doing this strategy in, and the cost could be huge.
That could be a huge drag on your profits? Per account, in and out, you are looking at a $6070 cost.
Then there is the risk of the deals not going thru and your shares tanking. And that usually happens
before YOU find out that the deal got scrubbed.
Would love to hear more from people using this strategy of the pitfalls, in addition to the HUGE profits
outline above. When a strategy appears too good to be true, it usually is. What am I missing?
Charging $2500 a pop is pretty "fully valued". What percentage of your subscribers have actually made
money with this strategy?
17 Jan 2016, 10:58 AM

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