Violent Capitalist

There's Still Hope for Focus Media After Sina Acquisition

kagame, if you employ merger arbitrage it won't matter that sina shares are rallying harder than FMCN

FMCN can go to 0, you lock in the value of SINA shares and you'll still have a net 50% profit on your original long FMCN stock.

you can also lock in further gains on your FMCN stock by buying some puts (I suggest Oct 2009 strike 5)

all of it is on my blog violentcapitalist.com

just sit back and relax! your only risk is the transaction won't go through


On Mar 20 06:28 PM kagame wrote:

> So apparently the merger shares would count against options.
>
> So the simply play here is long FMCN, write calls. I would short
> SINA but its rallying harder than FMCN, there is no correlation there
> right now.
>
> Why is the marker so irrational about this? Theres plenty of info
> out there that should allow people/funds/hedgies to buy on this misvaluation.

Focus Media / Sina Transaction: Think Outside the Box to Make Profits

I agree with punter, but doesnt mean you cant win big in this transaction

as Scheidt exlpained, you can employ merger arbitrage to lock in the gains. However, now the spread has widened to 40%+ and the rest of FMCN's business is considered worth nothing (I'd assume its worth 1-2/share after the latest results)

In addition you can lock in a $/share for FMCN shares by buying some puts. In the end the whole strategy can pay off 85%+!!

violentcapitalist.com

for the complete breakdown-

Five Cash-Rich Companies Worth a Look

Probably for any reason or a combination of the following:

1) investors are concerned about lower ROIs in the Chinese advertising market
2) people don't understand the deal or have not been paying attention (it's not well publicized)
3) FMCN wanted to buy a foot massaging company or something 1-2 months back (wtf?)
4) FMCN will be cash flow negative post sale and will have nothing to prevent the stock from trading at $1-2/share post sale

Nevertheless, doesnt mean you cant earn arbitrage profits of 85% or more! Check out my blogs or my website!


On Apr 10 05:09 PM kagame wrote:

> Anyone have any insight as to why FMCN isnt trading at the $10 a
> share it is worth in SINA shares alone, not even to count the stub
> FMCN company that will remain in existence with 50% of the companies
> assets and a quarter to a third of its revenue?
>
> Even if there is a 25% risk of the merger not going through I would
> think that FMCN should trade at or near $10.

Five Cash-Rich Companies Worth a Look

FMCN/SINA is a nice merger arbitrage trade, but it wouldn't it be nicer to bump that figure up to an 85% return?

All the details below:

www.violentcapitalist....