Malcolm Shaw's  Instablog

Malcolm Shaw
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A retired sell-side analyst and hedge fund VP focussing on companies where technical understanding matters. With a MSc in Geology and 12 years of experience spanning the resource and investment industries, my focus is on companies where digesting data and looking at underfollowed companies can... More
  • Patterson Lake Spread Gets Silly 2 comments
    Aug 12, 2013 11:46 AM | about stocks: FCUUF, ESOFF

    Update

    Ordinarily I wouldn't create a post simply to illustrate the spread between Alpha and Fission, but it has become too wide for me to stay quiet.

    Here's where it currently stands.

    On a fully diluted basis, Alpha is trading at almost a 12% discount to Fission. In my experience, that is not a sustainable siutation.

     

     

      Share Price Basic Shares (mm) Cash, basic ($mm) EV, basic ($mm) F/D Shares (mm) Cash, f/d ($mm) EV, f/d ($mm)
    AMW $5.85 25.3 18 $130.01 31.4 $33 $151.19
    FCU $1.16 149.5 16 $157.42 168.5 $27 $168.96
    Spread       21.1%     11.8%

    Disclosure: I am long OTCQX:FCUUF, OTCPK:ESOFF.

    Stocks: FCUUF, ESOFF
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Comments (2)
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  • bobbafett38@yahoo.com
    , contributor
    Comments (141) | Send Message
     
    well, Fission's bid today (Monday august 26th) for Alpha closed the valuation gap between the two. I sold my trading position in AMW CV for now on this gap, since there's no "arbitrage" edge between the two positions anymore. still very much invested in the two though long term, just trading around a chunk of it
    26 Aug 2013, 09:44 AM Reply Like
  • bobbafett38@yahoo.com
    , contributor
    Comments (141) | Send Message
     
    Well, the Alpha spread went to a discount to Fission and now with the FCU CV final offer, to a premium :). Glad I kept some of the Alpha (though I had sold the trading position as per my last comment).
    Anyway, there's been lots of money to be made trading these two companies even beyond the upside of their uranium discoveries---and there will probably be more risk arbitrage related opportunities to come with two more spincos coming out of Alpha and Fission per today's (sept 3rd, 2013) deal. It will be very interesting to see what valuations the PLS North + other properties spinco trades at...
    3 Sep 2013, 09:22 AM Reply Like
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