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Owen

Owen
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  • Genie Energy - Arbitrage Play With 10% Return In A Month [View article]
    That's right, the gap closed as you predicted. Although it may be difficult to cover the short on the preferred at he current price if you have more than a few hundred shares.
    Jun 1 09:31 AM | Likes Like |Link to Comment
  • Dorman Products: 70% Downside As Cyclical Headwinds Pick Up & Aggressive Accounting Unwinds [View article]
    Good analysis!

    Do we know which ERP system it is? Converting to SAP can kill even the most robust company.
    May 31 08:52 AM | 1 Like Like |Link to Comment
  • Genie Energy - Arbitrage Play With 10% Return In A Month [View article]
    "Even if you see, say, 1,000 shares available, there's likely nothing or at least very little behind it"

    That's correct. Looking at the Level II here, you have to go out all the way to $8 on the ask side to buy more than 13,000 shares. On the bid side, I don't even see more than 1,500 shares, and that's going down to a bid of $7.10.

    I think this type of trade works best if you manage to privately negotiate a deal outside the exchange with an interested party who is looking to buy more preferreds. Otherwise, bid-ask spread/slippage will eat up most of the arb profit.
    May 29 10:45 AM | Likes Like |Link to Comment
  • Genie Energy - Arbitrage Play With 10% Return In A Month [View article]
    Both classes of shares are now within one cent from yesterday's close, so there's no real change from end of yesterday. The bid-ask for the pair trade now stands at $0.20 - $0.34, with a grand total of 200 shares of the Preferred traded as of 10:30am.

    The Preferreds are now bid at $7.57, ask $7.69, under 1,000 shares on each side. I don't really see the liquidity you were talking about.

    Based on these numbers, if you open the arbitrage at market prices, you stand to make 5% on the trade, at best. Not bad for an almost risk-free situation, but not the 9.5% you quoted.
    May 29 10:30 AM | 1 Like Like |Link to Comment
  • Genie Energy - Arbitrage Play With 10% Return In A Month [View article]
    "Thus in the most extreme case risk arbitrageurs (assuming they take hedged trades) will account for only 20% of the tender."

    That's true. However, if there is a rush to borrow the preferred by risk arbitrageurs, stock borrowing cost could jump from the current 2.6% to well over 100% a year, as we've seen in similar situations where supply was limited. The number of shares IB shows as available for borrowing has already dropped from 150k to 108k in the one hour since you published this article. It could be down to zero by the end of the day.

    At 8% a month in borrowing cost, any arbitrage profit is wiped out.
    May 29 09:05 AM | Likes Like |Link to Comment
  • The Central Bank Boom Is Creating Huge Risks For Investors [View article]
    Fascinating article, Jake!

    While the correlation you show doesn't prove a causation mechanism, I believe it firmly establishes the notion that external demand for the longer-duration treasuries affects the economy no less than the Fed's traditional manipulation of the overnight rate, and quite possibly much more.
    May 19 11:59 AM | 3 Likes Like |Link to Comment
  • The One Amazing Thing About Sears [View article]
    @Trayton, I was going by their own audited statements on the 10-K. I didn't check what assumptions those pension liability numbers are based on.
    May 18 09:21 PM | Likes Like |Link to Comment
  • AT&T Becomes A Short On DirecTV Deal [View article]
    That's correct, Rappenco. However, other news or anything else could move the stock in either way on the ex day, so it's not always easy to see that $1 dividend come out of the share price.
    May 17 04:12 PM | Likes Like |Link to Comment
  • AT&T Becomes A Short On DirecTV Deal [View article]
    And I was simply pointing out that the situation today is better than it was in 1929, when most stock trading was done by day traders, or "operators", as it was called then. In fact, value investing wasn't even invented until five years later.

    But thank you kindly for your assessment of my humour.
    May 17 07:16 AM | Likes Like |Link to Comment
  • AT&T Becomes A Short On DirecTV Deal [View article]
    "Why have we turned investing into a casino game show..."

    Right, "we" never used the stock market for wild speculation right up until--um, 1929?
    May 16 09:38 PM | Likes Like |Link to Comment
  • The One Amazing Thing About Sears [View article]
    "SHLD is no where near dead"

    Shorting companies at death's door isn't very lucrative, as most of the bad news is priced in. The best time to short a company is when euphoria is at its highest. Reading some of the comments here, we may very well be there.
    May 16 09:09 PM | Likes Like |Link to Comment
  • AT&T Becomes A Short On DirecTV Deal [View article]
    "Two years later, WAG is in the upper-60s"

    I'm glad for you, Mike. Just keep in mind that two years is rarely enough time to see the full impact of an ill-advised merger.

    Remember, it has been 12 years since Kmart bought the failing Sears, Roebuck & Co, and changed its name to Sears Holdings, to the cheers of short-sighted analysts. Only ten years later did the full impact of the mountain of debt taken on for this venture and its detrimental effect on the merged company became clear to all.
    May 16 03:15 PM | 1 Like Like |Link to Comment
  • AT&T Becomes A Short On DirecTV Deal [View article]
    "Why on Earth would you want to short T when there are so many other companies that you could short"

    Do you also post a similar comment on articles recommending buying AT&T? "Why on earth would you want to buy T when there are so many other companies that you could buy?"

    This is an analysis about one company, namely, AT&T. It is not a recipe for an entire portfolio. The author states his opinion about T, which differs from yours. The fact that there are other companies to be shorted, or bought, is irrelevant.
    May 16 11:05 AM | Likes Like |Link to Comment
  • AT&T Becomes A Short On DirecTV Deal [View article]
    "2) banks are in it for the money, period."

    I would hope _everyone_ is in it for money. Are you owning AT&T for charitable reasons? Isn't money the entire purpose of investing? How is the banks' quest for money different from yours?
    May 16 11:02 AM | 1 Like Like |Link to Comment
  • AT&T Becomes A Short On DirecTV Deal [View article]
    Very true, David. Alas, growth in revenue doesn't always translate to growth in shareholder value, especially when it comes with substantial dilution and lower profit margins.
    May 16 10:29 AM | 1 Like Like |Link to Comment
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