Tender offer CVI; risk free profit?

Discussion in 'Trading' started by freddel, May 23, 2012.

  1. Daal

    Daal

    Sold a ton of my position here at the 29.40s 50s and 60s, locked gains. Market is too bipolar to keep the current level in my view. I probably get the chance to buy lower at some point. I'm not expecting an Icahn or CVI announcement any time soon
     
    #31     Aug 9, 2012
  2. Daal

    Daal

    I was wrong. Icahn withdrew offer blaming crack spreads. Just sold the vast majority of my position in the after-hours here. Avg price of something like 28.80 ish. I think I still have a profit on the trade because I was buying in the low 29s and selling in the high 29s over and over again. But I gave back almost everything.

    This stock will tank a lot of the coming days IMO. The only way to juice up returns here was to be levered long like I was, I bet that is a ton of people that will have to liquidate tomorrow
     
    #32     Aug 21, 2012
  3. Daal

    Daal

    Whats funny is that Icahn withdrew his bid not because the deal was bad or that he didn't want it but because he knows his price is too low and he will get sued if he goes forward. Refiners stocks have gone crazy over the last 30 days
     
    #33     Aug 22, 2012
  4. freddel

    freddel

    Icahn writes
    “At the time we made our original offer on August 6th to take CVR Energy private, we stated that we were willing to pay $29.00 per share but in no event would we consider paying more than $30 per share. Since then a number of market conditions have changed, including a significant widening of crack spreads. We no longer think that the proposed transaction is feasible at this time and we hereby withdraw it.”

    A widening crack spread is a good news for a oil refiner...



    Refining margins or ‘crack spreads’ are terms used to describe a benchmark indication of the margins made by refiners that process a specific type of crude oil into an assumed selection of refined products. A common refining crack spread is called the 2:1:1, which mirrors the gross margin that would be realized by a refiner if they purchased two barrels of light, sweet crude oil (based on the benchmark West Texas Intermediate or WTI) as feedstock, and produced one barrel of gasoline and one barrel of diesel. Since sour crude oil traditionally sells at a discount to WTI, the margin for sour refiners tends to be more favorable and is called a "sour crack spread".

    http://www.harvestenergy.ca/operating-activities/downstream-refining-marketing/refining-101.html
     
    #34     Aug 22, 2012
  5. freddel

    freddel

    #35     Aug 22, 2012
  6. freddel

    freddel

    An increase in so-called crack spreads, a measure of refining profitability, may have made Icahn’s offer appear low to investors (CVI) who held onto shares as he increased his stake, said Neil Earnest, practice leader for mergers and acquisitions at Dallas-based consulting company Muse, Stancil & Co. The shares have traded above $29 every day since Icahn’s Aug. 6 bid was announced.

    “He put a fairly big bet down on short- and medium-term refining margins, and whether or not he’s going to be happy as an investor remains to be seen,” Earnest said in a phone interview today.

    CVR increased (CVI) 0.4 percent to $29.66 at 9:51 a.m. in New York. The shares have risen 58 percent this year.

    Gaining Control
    “His offer was not going to cut it,” said Louis Meyer, a New York-based special situations analyst at Oscar Gruss & Son Inc. “Refiners are way up this year.”

    Remaining shareholders may hold out for at least $35 a share, Meyer said.

    Icahn gained control of CVR in May after saying the company would reap more value for shareholders if it put itself up for sale. He prevailed in a proxy fight with management by offering $30 a share and the right to an additional payment if he sold the company. More than 30 potential bidders were contacted over a 60-day sale process and no “credible” offers were received, according to a July 26 company statement.

    The crack spread for West Texas Intermediate crude widened 6.8 percent to $32.886 a barrel yesterday in New York from $30.794 on Aug. 6.
    http://www.businessweek.com/news/20...offer-for-cvr-energy-says-deal-isn-t-feasible
     
    #36     Aug 22, 2012
  7. freddel

    freddel

    #37     Sep 6, 2012
  8. freddel

    freddel