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Strategies & Market Trends : Rande Is . . . HOME
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To: Rande Is who started this subject4/16/2001 10:56:24 AM
From: maverick61  Read Replies (1) of 57584
 
Here is a potential swing trade. METHA will be distributing the 84+% shares in STLW that it holds to its shareholders on April 28th. The ratio is roughly 1.511 shares of STLW for each share of METHA. Doing the math right now, with METHA trading at 15.4 and STLW at 7.7 - that meanseach share of METHA is being valued at about $11.63 for the 1.511 STLW shares and $3.77 for the remaining METHA business.

Now, the interesting thing is METHA has a stock trading on an ex-divened basis exceuding STLW (METHV) that is currently trading at $3.90.

So, overall there are 2 opportunities for those so inclined. One is an arbitrage opportunity with the various shares. the other is a potential run-up in METHA shares prior to the distribution date of STLW.

Its also interesting to note that METHA's electronic divison, which it will retain, made up about 2/3 of METHA's overall sales (with STLW making up the other 1/3), and also contributed a lot to METHA's profitability.

the big question is what will METHA and its electronic division be worth on its own after the STLW spinout. Given their cash balance, level of sales and income, it wouldn't surprise me to see the answer be more than $3.77

So, I am long some METHA for a swing trade based on this distribution

biz.yahoo.com

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