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Thomas Lott
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I am a former hedge fund portfolio manager that trades for my own personal account. I espouse Graham and Dodd/Buffett style investing, always on the lookout for value equities or bonds. A graduate of Northwestern's Kellogg School of Management, I lived in NYC for a decade before relocating with... More
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  • How To Make 17% Risk Free In A Month!

    This article first appeared here at last week. Feel free to provide an email on our website to be notified first of new ideas before they appear on Seeking Alpha.

    Nothing is risk free, but this is about as low risk a way to make a few hundred bucks that I know. Often companies decide to launch tender offers for their shares, rather than buying them in the open market. It's a signal that management believes in the stock at current valuations and is often easier than attempting to spend days buying stock in the open market, which can perhaps be a drag on the CFO or the back office.

    In this case, Global Net Lease (NYSE:GNL) listed their shares on June 2nd on the NYSE, and simultaneously launched a tender offer to purchase up to 6.3% of the stock. Here, it is a way to support the share price of this private REIT turned public company. Since private REIT holders often have owned untradeable shares in a company for years, there likely are many anxious sellers. The tender helps to provide them some liquidity.

    With GNL, the tender price is fixed at $10.50, and the stock at $9.00 is trading 15% below the tender price. I recommend picking up 99 shares per account, and tendering via the odd lot provision. The odd lot provision means that any stockholder who owns less than 100 shares will have 100% of his shares tendered. That the 99 shares are not subject to proration.

    MAKE SURE YOU ONLY BUY 99 SHARES PER PERSON, NOT MORE THAN THAT! Then make sure you call your broker and request them to tender your shares, noting that it is an odd lot (under 100 shares).

    What is nice is that I can buy shares in my account, my wife's account, and our kid's accounts. That is 4 accounts in total for me.

    Company: Global Net Lease

    Ticker: GNL

    Current Price: $9.00

    Tender Price: $10.50

    P&L per share: $1.50

    Trade: Buy 99 shares per account

    Expiration of Tender:June 29, 2015

    Execution:Call your broker after the trade has settled, before June 29th, request that they tender your 99 shares, and also to "check the odd-lot box."

    The key is understanding if the company has enough liquidity to fund the tender (it does with cash and bank facilities), and how long you have to wait to get your cash. In this case, about a month.

    So, net net I can make $149/account in free money. With 4 accounts, that totals $594, just about enough to purchase a one year membership to! Apologies for the shameless promotion, feel free to comment if you have any questions.

    Be careful too, my understanding is that a single individual with 2 taxable accounts however, cannot do this twice. This is a trade unique to each social security number. Recently too I was informed that individuals cannot do this twice, even if one is account is taxable, and one is a retirement account.

    Tags: GNL, Long Ideas
    Jun 17 11:03 PM | Link | 10 Comments
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