Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Bob Rudd who wrote (12197)	3/22/2001 10:49:27 AM
From: Andrew	Read Replies (1) of 78748

my dear bob- Look at hard asset values of these companies. They were built from ground up and not from goodwill laden acquisitions. As development projects that are now coming on-stream your cash flow analysis is a rear view look in a mirror that is completely inapplicable. The value trap was the fact that this was a complex empire of small piss-ant companies that had related party transactions that were illiquid. However, the combination of all these companies into one removes this main 'value impediment'. a) reduction of complexity and creation of simplicity;- which one to buy?- there will only be one to chose to buy or not; b) reduction of related/affiliated party transactions and rebuilding of trust with investment community; c) combining several small companies into 1 larger company- better chance to be on someone's-anyone's radar screen. d) Also substantially increased liquidity. (If cdl shares are issued at mkt value of both crg and rdge, less all the shares of CDL already owned by CRG and RDGE there may around 20 million CDL shares outstanding). There are few ways to play this as it evolves- appealing to arbs and value investors alike a) immediate arb between crg and crg pfd- these securities are economically equivalent (but for voting rights). Yet common shareholders have always been in minority to cotter anyway. In addition, Cotter has been on record several times saying there is no difference between the two and a few years back issued crg pfd to crg common holders as equivalents. Also, crg pfd has $6/share liquidation preference over common. If the securities are getting CDL stock, its no different than cash deal. Thus until they are in parity, arb of equal $ DOLLARS short common and long crg pfd would create net long shares of CDL on completion of deal for free. Note, once the definitive terms of ratios are out crg and crg.pfd spread will vanish in a heartbeat. b) value long play- Stub CDL on combined company is extraordinarily cheap (note release- combined book value of $100MM at 12/31 does not include the likely gain from acquiring 'minority interests' of crg/rdge at market price far below their book values- that gain will add to the $100MM) but its always cheaper to play stub via owning target. Thus RDGE and whichever is cheaper of crg.pr or crg common are best way to play this as value long.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next