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Contrarian, deep value, long/short equity, special situations

United Development Funding - Short-Term Upside For Small Investors

United Development Funding IV (NASDAQ:UDF) is a REIT that tends to homebuilders and developers within single-family residential space. The company has recently announced tender offer to purchase 1.7m shares (5.3% of the total) at $20.5. With shares currently trading at $19.5, this represents a nice 5% profit within a month (the 2nd July). As the tender is likely to be oversubscribed, this special situation applies mostly for holders of less than 100 shares who will not get prorated.

Why is the company tendering the shares?

The official reason for the tender is that management believes it would be a prudent use of UDF's financial resources and an efficient way to return capital to shareholders. The company had $20m...

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