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Daal
Registered: Oct 2002
Posts: 9019 |
08-07-12 12:35 AM
Here are some lessons so other people don't commit the same mistakes
-Took too big of a position to begin with, had 10% of my assets in the stock. Kept wanting to watch every tick of the stock. If you have a fundamentally oriented trade and have an intraday chart or L2 open, you are trading too big
-Trust your read of other people, I thought Icahn was a nice guy to shareholders, he wouldn't screw them here but didn't trust my read completely
-Don't sell fundamentally sound oriented investments during panic selling. If I had a smaller position I wouldn't give a damn about the decline
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Daal
Registered: Oct 2002
Posts: 9019 |
08-07-12 04:37 PM
Bought some stock here at 29.56
I believe I understand what Icahn is doing, its a brilliant play. He was afraid a $30 tender wouldn't get the additional 8-9% of the stock he needs(Last 10% he will get automatically). So what he does is to offer to tender at $29 and ANNOUNCE he accepts up to $30, no one in their right mind would do that because the seller will always want the higher price
Also no board of directors in the right mind would take the lower offer when they can get a higher one
What he is doing is trying to get the stock to trade between $29-$30 to attract SPECULATORS like me instead of long-term holders, who just want to make a quick buck. This will help him get the necessary ownership to scoop the last 10% at the same price
Stock is pricing in almost even chance of $29 or $30 being the final tender price when in reality its MUCH more likely he will bump to $30 because the board of directors have a duty to fulfill plus in a pricing situation you never announce how much you are willing to pay so Icahn will get hit on his limit
I bought a bit less than 50% of my intended position because I suspect the stock will sell-off over the coming days allowing me to have a better average.
He choose the board so it seems likely to me he will get his pawns to delay any announcement or negotiations because he needs the stock trading between $29 and $30 for a few days or weeks to attract a lot of speculators. Then its likely he will bump the tender price
I wish I had a prop account, I will run into margin issues here if I keep buying
Worst case I tender on the last day at $29 and lose 56 cents a share
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Daal
Registered: Oct 2002
Posts: 9019 |
08-07-12 04:51 PM
"Gentlemen:
As you know, Icahn Enterprises L.P. owns approximately 82.0% of the outstanding shares of common stock of CVR Energy, Inc. We would like to discuss a potential acquisition of the remaining shares of CVR common stock by Icahn Enterprises in a merger transaction pursuant to which CVR shareholders would receive $29.00 per share in cash for their CVR shares. We would of course be willing to negotiate this price with you, but in no event would we consider paying more than $30 per share (i.e., the price we paid in our recent tender offer). In this regard, it should be noted that the recent sale process involving CVR, in which more than 30 potential bidders were contacted, produced no credible offers for the company. We look forward to hearing from you.
Very truly yours,"
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Daal
Registered: Oct 2002
Posts: 9019 |
08-08-12 07:34 PM
Bought more at 29.12 ish. Stock offering huge odds for betting on a tender at $30(Or anything above $29 pretty much)
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Daal
Registered: Oct 2002
Posts: 9019 |
08-08-12 09:48 PM
I misread something on the Icahn offer. I thought it was a tender offer at $29 but its actually a MERGER. This is a huge difference, in a tender people have a choice on what to do, in a merger initiated by the majority shareholder the other shareholders only have a choice if the board calls a VOTE. But they are not required by the law
http://www.pepperlaw.com/publicatio...?ArticleKey=184
They are only required to treat them with 'entire fairness'. The majority shareholder has the choice of picking an independent committee, independent board or a third party to evaluate the company and do the transaction. Or they cold do a shareholder vote. I see almost no chance the board(Appointed by Icahn) will call a vote. They will just press for $30 and agree to do it
If has to be at $30 since the board has the legal obligation for 'entire fairness' and there is just no way they can defend themselves if they agree at $29 when the other guy said he would go to $30. Icahn behavior doesn't make economic sense and the judge would see that
He would also hurt his reputation and probably be sued. Hence this thing will go for $30
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