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Chris DeMuth Jr.
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  • One For The Kids 9 comments
    Sep 4, 2014 3:31 PM | about stocks: GPX

    GP Strategies Corporation (NYSE:GPX) offers training services and consulting to companies, especially in the engineering field. They are in the process of conducting a Dutch tender offer. The offer will close on Monday, September 29. It is reasonably likely that it will go at the high end of $29. For a quick gain of 6% or so within a month, you can buy 99 shares and avoid proration as described in their tender filing. This is a small scale opportunity, but a fine way to put some of the profit to work from our recent lemonade and coffee stands.

    Disclosure: The author is long GPX.

    Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital, a partnership that invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our partners, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

    Themes: odd lot, proration, 99 shares Stocks: GPX
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Comments (9)
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  • earljr1
    , contributor
    Comments (388) | Send Message
     
    Chris, why do you think it will go on the high end $29ish? Is this just based on the recent price action?

     

    WBMD might be another one to consider if it dips much more. But the tender expires Sept 9, so buying now might be pushing it.
    4 Sep 2014, 04:21 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (5366) | Send Message
     
    Author’s reply » Of course I could be wrong, but that is what I think shareholders will conclude it is worth. Much less and they could/would simply sell the shares in the open market.
    4 Sep 2014, 04:26 PM Reply Like
  • Omer Altay
    , contributor
    Comments (505) | Send Message
     
    These kinds of deals work great with a broker that offers $0 commission. Merill Edge is 100 free trades a month with a certain balance.
    5 Sep 2014, 02:52 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (740) | Send Message
     
    Thanks for the article.

     

    These tender offers could be a good place to park cash indeed. Look what happened to the FBRC tender offer in July/August. The company announced to repurchase 10% between $28 and $29. 16% was tendered at $28, and the company ended up buying 12%, so 2% more. Now the stock is over $29. Just like you expect with GPX.

     

    At $28 FBRC had a forward PE of below 10 and a PB of below 1, so it had much better statistics than GPX.

     

    I wonder why anyone would offer shares at the lower end of the range however, like the shareholders of FBRC did.
    6 Sep 2014, 03:16 AM Reply Like
  • mjflack
    , contributor
    Comments (11) | Send Message
     
    Chris,

     

    Thanks

     

    So buy 99 shares, then have your broker tender them at $29.00? It's that simple?
    14 Sep 2014, 06:05 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (5366) | Send Message
     
    Author’s reply » Yep, that simple.
    14 Sep 2014, 06:07 PM Reply Like
  • bazooooka
    , contributor
    Comments (3452) | Send Message
     
    Scottrade charges a tender fee. Any suggestions for brokers that don't?
    15 Sep 2014, 04:15 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (5366) | Send Message
     
    Author’s reply » I recall readers mentioning Scottrade in the past as gauging clients in that way. I've had no problem with: GS, IBKR, SCHW, or Vanguard, none of which has ever mentioned or charged a tender fee but each of which has their + and - that I could discuss.
    15 Sep 2014, 06:49 AM Reply Like
  • jaginger
    , contributor
    Comments (669) | Send Message
     
    I believe optionsXpress and optionshouse are 2 more, in addition to the list from Chris below.
    15 Sep 2014, 10:52 AM Reply Like
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