Recommendation: Long Intervest Bancshares (NASDAQ:IBCA) at $9.60
Target Price: $10.08
We believe Intervest Bancshares is an attractive merger arbitrage situation. The confusion in the merger consideration calculation leads to a mispricing of the shares at current price. If the merger closes in 6 months, the annualized return would be 10.00%. The downside risk is very limited because Intervest traded at 0.85x book value at the unaffected price. As a result of these factors, we recommend a long position in the stock.
Intervest Bancshares is a wholesale deposit gatherer and multifamily, commercial real estate (CRE) lender with offices in New York and Florida. The bank focus on cash flowing properties located on US East...
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