Yuanxi Zhang
Long/short equity, value, special situations

Camelot Information Systems: 5.6% Gross Return In 1.5 Months

Recommendation: Long Camelot Information Systems (NYSE:CIS) at $1.94

Target Price: $2.05

Thesis

Camelot's go-private deal is likely to close in late January/early February in 2014. We believe the company will announce the exact date of the special shareholder meeting in two weeks. Following the shareholder approval in late January, the go-private deal will close as the merger does not require MOFCOM approval in China. The investment is likely to generate 5.6% return within 1.5 months with an optionality to receive a higher offer. We think the opportunity exists because the stock has no analyst coverage. The downside is limited as there was a legitimate potential buyer bidding at 17 cents above the deal price in the bidding process.

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