Mmmm, OK, let's try and figure out why these guys from a U.S Hedge fund (Crescendo) is suddenly interested in an old established Canadian software company.
One thing for sure, their interest in Geac is not because they care for long-time Canadian shareholders like us. From their binoculars south of the border, the U.S. vultures (I mean hedge fund) saw a cheap stock and a company that they can bully to make a profit for themselves with a mere 5% stock investment holding.
Vultures need to kill the company (push management to make short term decisions) in order to DEVOUR THE CARCASS.
So what should we do?
Firstly, we must not regard Crescendo as being our white knight. On the contrary, they are taking away our long-term prospect in Geac. For instance, I was hoping that Geac will pay a dividend while also making small acquisitions to grow the business. This will provide stable and a long-term viability outlook. Now however, the long-term prospect is gone since the vultures are circling the company for the carcass. No longer is there long-term prospects.
Crescendo said they had wanted board representation because they fear that management might overpay for an acquisition. What a laugh!. What they really mean is that if managment were to make a big acquisition to further the long-term prospects of the company, there won't be a carcass for feeding.
Since Crescendo should not be regarded as being on our side, we need to exploit them before they exploit us. This means, we need to monitor what Crescendo is up to and SELL OUR STOCK in a timely manner. For example, if there is a dutch action, SELL in the Dutch action because vultures tend to do so. If there is a take-over, SELL before or with the vultures.
In short, do not get lulled into thinking that Crescendo is doing us a favour. Also, do not get lulled into thinking that Geac management is now interested in making long-term decisions.
It is now every woman and man for themselves. Only way to deal with vultures is to SELL the carcass before they do and not to thank them.
BTW, good time now to buy a live animal at $10.60 and sell the carcass at $15.00.
ally@dealingwithvultures.com
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