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Chris DeMuth Jr. is the founder of Rangeley Capital LLC. Rangeley is an investment firm that focuses on event driven, value-oriented investment opportunities. Rangeley Capital and his value investing forum, Sifting the World (StW), search the world for misplaced bets. Rangeley exploits them for... More
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  • Last Call For Spectrum Group 48 comments
    Feb 27, 2014 1:21 PM | about stocks: SPGZ-OLD

    Spectrum Group (OTCPK:SPGZ) was caught up in the Afinsa/Escala affair, which was one of my all-time favorite shorts as recently as early 2006. Without rehashing the story, it ended with an insider changing his name and false walls hiding stacks of cash. But that is all in the past.

    The future of a publicly traded SPGZ is one that will only last for a few more hours, but this time there is a long opportunity. If you buy 996 shares today at $2.90 or so, you will receive 249 shares of the A-Mark (NASDAQ:AMRK) spin-off at an attractive price and will be cashed out of the stub equity for $0.65 per share.

    Time is short, so I'll keep it quick and simple: the stub is a loser that you're better off without anyway and the spinco is worth holding onto. At today's price, after adding back the cash, you are paying a price equal to about 2/3rds the conservatively valued spin-off. You keep the valuable coin business while jettisoning the undesirable collectibles. Not bad for an hour's work and a modest amount of capital in your IRA. You'll probably end up making well over a thousand dollars, which you can spend on gold coins (or anything else). I prefer silver to gold and like to pay as little over spot as possible. If AMRK hits my price, then one would be able to afford five 10 oz silver bars with the profit and still have enough change to buy lunch.

    Stocks: SPGZ-OLD
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Comments (48)
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  • futureguy
    , contributor
    Comments (12) | Send Message
     
    Hi Chris,

     

    when is the A-Mark spin-off?
    27 Feb 2014, 02:25 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » Tomorrow.
    27 Feb 2014, 02:27 PM Reply Like
  • 389190
    , contributor
    Comments (187) | Send Message
     
    this is from the press release,according to it you had to be a stockholder on 2/12, any comments
    "The distribution will be made on or about February 28, 2014 (the "Distribution Date"), to SGI stockholders of record on February 12, 2014."
    27 Feb 2014, 02:38 PM Reply Like
  • johncworth
    , contributor
    Comments (439) | Send Message
     
    Unless the SPGI website is incorrect, I think 389190 has it right...
    27 Feb 2014, 02:54 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » I think that new shareholders will get the spin-off. Their CEO does too.

     

    Also, their disclosure appears to me to be as clear as could be, "Up to and including the distribution date, the SGI common stock will trade on the “regular-way” market; that is, with an entitlement to shares of A-Mark common stock distributed pursuant to the distribution.".

     

    But if we're incorrect, then I would highly recommend shorting SPGZ. If you were to short 999 SPGZ shares and were not to get the spin off, you'd make $2,247.75 per account, which is better than my idea.
    27 Feb 2014, 03:12 PM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    "SGI common stock will not trade on an ex-distribution market; that is, without an entitlement to shares of A-Mark common stock distributed pursuant to the distribution."
    27 Feb 2014, 03:47 PM Reply Like
  • TheCompleatAngler
    , contributor
    Comments (175) | Send Message
     
    This situation is unclear. FINRA has told me that the SPGZ is required to provide them with information regarding the spin-off but has not yet done so. Without this information, FINRA cannot establish an ex dividend date. My broker also has informed me that DTC sent out a comment a couple weeks ago that SPGZ has not yet provided it with the necessary paperwork related to the distribution and has been in touch with the transfer agent. I've observed other instances where there was such ambiguity related to a distribution, such as no ex date established, etc. because of management incompetency; and what I've observed is that anything can happen. Buyers today may receive the distribution. It could also turn out that in order to receive it, you had to have settled shares in your account on the distribution date in order to qualify to receive the distribution. And it could also turn out that the record date winds up being used. Good luck.
    27 Feb 2014, 03:51 PM Reply Like
  • TheCompleatAngler
    , contributor
    Comments (175) | Send Message
     
    The most recent situation that I'm aware of where an ex dividend date wasn't established for a distribution was GYRO at the beginning of the year. In that case, there were two distributions close together. For the second distro of notes, no ex dividend date wound up being declared. When that happened, qualifying rules for receiving the distribution reverted to the default of settled-owner-as-of-th... If I had to bet on who qualifies for the SPGZ distro tomorrow, presuming it does in fact occur tomorrow, I would bet that only settled owners as of tomorrow will receive it because of precedent. Another peculiarity of this distribution is that were an ex dividend to be established, it would be the day after the distribution date because the 25%+ dividend rule would be invoked because of the size of the dividend relative to the value of the stock. But this appears to be a moot issue at this point.
    27 Feb 2014, 04:45 PM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    Looks like they just announce a delay.
    27 Feb 2014, 05:21 PM Reply Like
  • TheCompleatAngler
    , contributor
    Comments (175) | Send Message
     
    The text of my prior comment got bungled somehow. What I intended to say was that in the case of GYRO's second distro, because the company did not inform the SRO with authority over GYRO's stock and thus of establishing an ex dividend date for the distribution in a timely fashion, no ex dividend date was declared; and when that happens the rules determining eligibility to receive the distro default to DTC payment rules, which are that only settled owners of the stock on the record date are eligible to receive it. Rule 10b-17 of the Securities Exchange Act of 1934 requires that an issuer of an OTC equity, which SPGZ is, notify FINRA at least 10 days prior to the record date of a distribution that the distribution is pending. If this is done, then FINRA will establish an ex dividend date. If not, then FINRA cannot establish an ex date. It appears that SPGZ has failed to notify FINRA of the planned stock distribution in A-mark on a timely basis, thus violating Rule 10b-17. I've learned from observation and experience that CEO's are not authorities on distributions and the rules governing them. I always check with the SRO whose rules govern the stock in question for confirmation of the qualification for determining who is eligible to receive the distribution, and if it turns out that the SRO hasn't been informed about it and will not be making a determination, then I assume that DTC rules will apply, and DTC eligibility criteria is settled holders as of the record date.
    27 Feb 2014, 07:24 PM Reply Like
  • StamperD
    , contributor
    Comments (16) | Send Message
     
    They filed an 8-k this afternoon stating they're postponing the spin-off until early March, so probably nothing to worry about as far as dates are concerned. The more relevant part of the 8-k was their agreement with Afinsa & Auctencia to buy back their shares of SPGZ (10% owners) which will decrease A-Mark's shares outstanding by the same percentage.
    27 Feb 2014, 08:45 PM Reply Like
  • johncworth
    , contributor
    Comments (439) | Send Message
     
    Well, given all that, is it still possible to buy the shares tomorrow (March 1st) and catch the dividend? Not a huge deal either way, but fun to do if possible.
    27 Feb 2014, 10:51 PM Reply Like
  • ValGal
    , contributor
    Comments (107) | Send Message
     
    This is a very odd turn of events with the delay of the spin-off. Has anyone seen a similar situation? First, they were not clear as to ex-div date (great summary by compleatangler) and now they casually delay the spin-off . . .
    28 Feb 2014, 08:05 AM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    Maybe they delayed because they were working on this opportunity to buy back shares cheap for everything changed.
    28 Feb 2014, 08:57 AM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    Chris, it looks like we still have plenty of time to do this. Looking at the assets, this business seems to be shrinking and a consistent money loser. How do you come up with value 1/3 higher than here?
    28 Feb 2014, 11:38 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » Just to understand your question, are you referring to SPGZ or AMRK? I agree 100% on SPGZ but think that AMRK is subsidizing SPGZ and will look very different as a standalone company.
    28 Feb 2014, 11:46 AM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    I'm referring to AMRK. I'm having trouble finding anything to determine a value. Other than the price SPGZ just paid yesterday to buy back a bunch of shares at $2.10.
    28 Feb 2014, 01:00 PM Reply Like
  • StamperD
    , contributor
    Comments (16) | Send Message
     
    OTC Adventures wrote a lengthy and well-researched piece about the value of AMRK as a standalone company. If you're interested in this situation, I encourage you to read it.
    28 Feb 2014, 12:28 PM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    Thanks, that is exactly the kind of info I was looking for. Here is the link:

     

    http://bit.ly/1obzInJ
    28 Feb 2014, 01:07 PM Reply Like
  • Special Situations and Arbs
    , contributor
    Comments (1445) | Send Message
     
    Interesting one! I am having a hard time finding the proper symbol for A-Mark...Anyone?
    28 Feb 2014, 03:25 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » AMRK when it begins trading as soon as next week.
    28 Feb 2014, 03:27 PM Reply Like
  • Dendrite Research
    , contributor
    Comments (25) | Send Message
     
    I've been following this situation for a while, and it's an interesting one. In a recent 8-K, they announced that their largest shareholder Auctentia was selling their entire stake back to the company. If you do the math, Auctentia sold for $2.10 a share. Any idea why an insider would sell out at 75% of the market value?
    3 Mar 2014, 01:13 PM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    I wondered the same thing. We saw a similar under-priced buyback at with FIG recently. All I can figure is that the demand by little accounts to get fewer than 1000 shares is exceeding the supply. But big buyers are not that interested at this price.
    4 Mar 2014, 09:48 AM Reply Like
  • earljr1
    , contributor
    Comments (526) | Send Message
     
    Also, I haven't seen any info on where they are getting the cash to buy all these shares back and to pay the .65. I assume they have some kind of line of credit. Just wondering.
    4 Mar 2014, 09:59 AM Reply Like
  • futureguy
    , contributor
    Comments (12) | Send Message
     
    From the time this article is published the stock is up 12% thanks Chris.
    4 Mar 2014, 11:40 AM Reply Like
  • JessePinkman
    , contributor
    Comments (159) | Send Message
     
    where is the notice of delay....
    10 Mar 2014, 07:30 PM Reply Like
  • futureguy
    , contributor
    Comments (12) | Send Message
     
    any news on this one guys?
    11 Mar 2014, 11:43 AM Reply Like
  • StamperD
    , contributor
    Comments (16) | Send Message
     
    http://tinyurl.com/nor...

     

    A-Mark registered their securities with NASDAQ, just filed registration statement with the SEC this afternoon.
    11 Mar 2014, 04:32 PM Reply Like
  • TheSandman
    , contributor
    Comments (162) | Send Message
     
    http://bit.ly/1fUIQOw

     

    By my reading, if you purchased these on Feb 28, you are not entitled to the payout + AMark shares. Am I wrong? I am a simple scientist, and your world of magic and finance confuses me. ;-)

     

    In that case, what happens if you own the 996 shares?
    12 Mar 2014, 11:19 PM Reply Like
  • StamperD
    , contributor
    Comments (16) | Send Message
     
    Yes you are wrong, in the press releases it says that the shares will trade along with the right to receive AMRK shares, not ex-dividend (without right to AMRK shares).
    13 Mar 2014, 06:26 AM Reply Like
  • TheSandman
    , contributor
    Comments (162) | Send Message
     
    Whew. The 249 shares hit my Scottrade account Friday morning... looks like I will be switching to IB sooner rather than later.

     

    CDjr -- Thanks for throwing a little bone to us small-fry family men out here. I have profited greatly by absorbing your ideas -- and the cash has been nice, too!

     

    DrBob
    22 Mar 2014, 04:54 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » DrBob -- You're welcome. I'm glad that this worked out. Did you get your $0.65/share in cash, too? If so this worked out fine.
    22 Mar 2014, 05:21 PM Reply Like
  • futureguy
    , contributor
    Comments (12) | Send Message
     
    Thanks Chris for this idea. Even I received the shares on Friday in my scottrade account, they are really slow. I did not get the cash per share though, did any one over here get it ?
    22 Mar 2014, 10:15 PM Reply Like
  • StamperD
    , contributor
    Comments (16) | Send Message
     
    They haven't announced the official date of the reverse split yet. The surprising thing is SPGZ is trading close to the .65 payout anyway. I'd think we'd hear something about it soon.
    23 Mar 2014, 08:31 AM Reply Like
  • jaginger
    , contributor
    Comments (816) | Send Message
     
    $AMRK around $13 on the first day of trading. This makes about a 35% return so far on this trade.

     

    $13 / 4 + $0.65 = $3.90 total value per share of $SPGZ previously owned.
    17 Mar 2014, 10:57 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » Better than a sharp stick in the eye (unless you like that kind of thing).
    17 Mar 2014, 11:01 AM Reply Like
  • jaginger
    , contributor
    Comments (816) | Send Message
     
    Yep. Thank you Chris!
    17 Mar 2014, 11:11 AM Reply Like
  • ValGal
    , contributor
    Comments (107) | Send Message
     
    jaginger,

     

    It is better than 65 cents for the stub. It is 67 cent bid and there was a real bid above 80 cents for most of morning. sell . . .
    17 Mar 2014, 11:34 AM Reply Like
  • futureguy
    , contributor
    Comments (12) | Send Message
     
    I don't see $AMRK shares in my account still . I bought $spgz on 2/27
    17 Mar 2014, 11:58 AM Reply Like
  • futureguy
    , contributor
    Comments (12) | Send Message
     
    hi Jaginger ,
    I bought spgz shares on 2/27 and i dont see AMRK shares still on my scottrade account. when did you buy yours?
    17 Mar 2014, 11:59 AM Reply Like
  • jaginger
    , contributor
    Comments (816) | Send Message
     
    Future guy,
    I bought on 2/27. Scottrade is sometimes slow on corp actions in my experience. shares hit my IB account.
    17 Mar 2014, 12:23 PM Reply Like
  • futureguy
    , contributor
    Comments (12) | Send Message
     
    ok thanks
    17 Mar 2014, 01:30 PM Reply Like
  • jaginger
    , contributor
    Comments (816) | Send Message
     
    Thx. Got out at $.71. Trading below the $.65 put now.
    17 Mar 2014, 04:26 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » Well done, jaginger! -C
    17 Mar 2014, 04:28 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » AMRK +>7% so far. With greater visibility, there should be more to come. So far so good.
    18 Mar 2014, 07:39 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » AMRK hit a new 52-week high.
    6 Nov 2015, 07:00 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » A new 52-week high for AMRK.
    5 Jan, 05:06 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11423) | Send Message
     
    Author’s reply » Another new 52-week high for AMRK.
    19 Feb, 07:00 AM Reply Like
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