I'm taking a position in Houston Exploration Company (THX). In some ways it fits, imo, the classic Ben Graham definition of an investment operation.
THX is trading about 17 1/2- 17 3/4. The majority owner (64%) is seeking bids to sell the company. They are looking for bids of $24 to $27 per share. If they are successful in getting a buyer, my guess would be the price gap will close somewhat. (THX stock price will move up on the news.). For stockholders to get the full buyout price- that will take some time - maybe as much as 6 mo. or possibly even 1 yr (regulatory/gov't approvals). But I'm not sure of this, and so the timeframe might be shorter. Still, with patience the rough return would be 6 points (or more) on an 18 dollar stock for a 33% gain.
If no deal is forthcoming, I figure the risk is time value of money. THX is now announcing gas finds, "positive reserve replacements", improved earnings. The stock has generally traded at 17 or better in the past 2 years, so I don't see a large downside risk (from 17 3/4) if no buyers are forthcoming. If there's no deal, investors should be able to "eventually" unwind their positions with little capital loss, maybe even a little gain.
Just my analysis, and I've been wrong many, many times before.
finance.yahoo.com
biz.yahoo.com
Paul |
