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Unique Opportunity To Earn A Double-Digit Annualized Return From Reverse Split, Going Private Notice For Royal Hawaiian Orchards

Steve Harris profile picture
Steve Harris


  • Royal Hawaiian Orchards has announced a reverse split; going private notice.
  • Shareholders owning less than 2,000 units will receive a cash consideration of $2.41 per unit, which is a 3.40% premium to the current bid price of $2.33.
  • The effective date of the split will likely occur in 30 days and provides investors with an opportunity to earn a double-digit annualized rate of return upon completion.


Royal Hawaiian Orchards, L.P. (OTCQX:NNUTU) filed a Schedule 14 today which outlines its planned reverse split; going private transaction. Unitholders will receive one post-split Unit for each 2,000 pre-split units. Limited partners who own less than 2,000 pre-split units will receive cash payments of $2.41 per unit.

Since the stock is currently offered below the tender price of $2.41, the terms of the deal provide an opportunity for an immediate arbitrage. Investors who purchase 1,999 units of NNUTU below $2.41 can expect to receive cash back for their shares in 30 days upon the effective date of the reverse split.

For simplicity's sake, I am including a table below which demonstrates the expected return based on the purchase price of the units, as well as the annualized rate of return, assuming the transaction is consummated in 30 days:

Purchase Price Return After Tendering at $2.41 Annualized ROR Assuming Tender Completed in 30 Days
$ 2.33 3.43% 41.20%
$ 2.34 2.99% 35.90%
$ 2.35 2.55% 30.64%
$ 2.36 2.12% 25.42%
$ 2.37 1.69% 20.25%
$ 2.38 1.26% 15.13%
$ 2.39 0.84% 10.04%
$ 2.40 0.42% 5.00%

As a long time reader and occasional contributor, I am already envisioning the criticism that will be heaped on me for suggesting this trade. "Why would I ever do a trade to earn $150?" How about a nice steak dinner for you and the family.

For me personally, I am continuously seeking out unique situations that provide solid risk-adjusted returns no matter what the size. Over time, lots of singles produce as many runs as waiting for the homer. If you have a family of four, this trade can be put on in your account, your spouse's account, and your children's accounts, which will add to your enjoyment.

What are

This article was written by

Steve Harris profile picture
Independent investor with over twenty years of trading experience across multiple asset classes. My main focus is on equities and fixed income with an emphasis on deep value and special situations. A former derivatives trader at top-tier U.S. financial institution.

Analyst’s Disclosure: I am/we are long NNUTU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am long NNUTU and may purchase more or sell shares at any time.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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