Seeking Alpha
Editor's notes: Commencement of a tender offer for under-followed PVD will catalyze shareholder returns. Up to 20% upside on an annualized basis; downside is limited if the deal falls through.

Recommendation: Long AFP-Provida (NYSE: PVD)

Catalysts: Commencement of tender offer

Expected Annualized Return: 21.8%

Thesis

AFP-Provida (PVD) is an under-followed Chilean pension fund manager that will commence a tender offer to purchase all the outstanding ADS soon. Simply buying the shares and tendering them will generate a 4.52% absolute return if the tender offer is consummated by the end of October. If the offer is closed in November or December, shareholders should receive an additional interim dividend reflecting the earnings in the first half of 2013, which will boost the absolute return to 7.78%. In the very unlikely case that the acquirer of the company, Metlife, decides to walk away from the deal,...

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