Bankers Petroleum: Update On My Position

| About: Bankers Petroleum (BNKJF)

As you know, there has been tremendous activity in Bankers Petroleum's stock since the sale announcement of the company last weekend. Over 130 million shares were traded in the last four days. This is over half of total shares. This is truly remarkable for a stock that traded with daily volume of about a million shares before the announcement.

Let's verify the structure of the public shares of the company.

Bankers Petroleum (OTCPK:BNKJF) - Public Shares Ownership






Institutions (top 10) 19.8% 14.6% 17.7% N/A
Institutions N/A N/A 36.1% 29.2%
Mutual funds N/A 26.1% 32.5% N/A
Click to enlarge

As you can see, no one really knows who owns what at a given time, but an estimation is possible. Let's say that 32.7% and 29.3% of total shares are owned by institutions and mutual funds respectively. The management and directors also own 6% of the company. Therefore, the public float is about 32% of total shares.

We already know that the management will vote yes. How will the institutions vote? Some long-term player might be tempted to say no while others, more recent buyers might say yes to cash a very nice profit. It is also difficult to know in which direction mutual funds will vote in the next meeting. From what I read, they usually go with the recommendation of the board: this would mean voting yes. The next question is why is the arbitrage so big?

This massive arbitrage could be related to the acquirer, Geo-Jade. As pointed out in the comment section of my Seeking Alpha article, Geo-Jade is looking to raise capital to fund this acquisition. The large arbitrage must be related to the financing risks related to the acquirer.

I believe that those risks, while present, are overstated. Management would not have gone this far without being sure that Geo-Jade will be able to deliver. Another sign of Bankers' confidence in Geo-Jade are the recent transactions by insiders. Indeed, three insiders, including the CFO and the CEO, bought 146,200 shares on March 23.

Finally, here is an update on my position in Bankers. I sold a third of my position today to raise cash and add to my position in Amaya (NASDAQ:AYA). The current low share price is very appealing for me to buy more. I will hold the rest of my position for the time being. Stay tuned for other updates and happy Easter!

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.