I've retained my stake in Nikko Cordial (OTC:NIKOY). The latest reports I've seen say approximately 61% of Nikko shares have been tendered to Citigroup (NYSE:C). Citi now controls the company, but lacks the two-thirds ownership required to make decisions without regard to minority shareholders.
Why didn't I give up the position? Because I believe that Nikko Cordial will do well over the next several years. I have no idea how the shares will perform in the near term (though more than one report has them trading above Citi's 1700 yen price in Japan on Friday). No one does and you and I shouldn't care. Or we shouldn't if we're long term investors.
Either Citi will sweeten the pot a bit to gain more than two-thirds of the outstanding shares. Or the market will gradually value Nikko more over time and we can sell our stake for a better price later. Citigroup obviously believes Nikko is -- or will be -- worth more than 1700 yen or it wouldn't have made the offer. But that's a side note.
I don't know what's going to happen. I do have conviction that Nikko Cordial is a fine investment, and will continue to be with Citigroup calling the shots.
One more thing: Nikko was purchased at the ADR split-adjusted price of $8.64. Bloomberg says the ADRs closed Thursday at $14.00. The stake was established at a great price, which positions the Nikko Cordial holding well for the future.
NIKOY 1-yr chart