Author Topic: NYNY - Empire Resorts  (Read 1950 times)

Foreign Tuffett

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Re: NYNY - Empire Resorts
« Reply #10 on: August 19, 2019, 05:04:01 AM »
Really nice call on this


Gregmal

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Re: NYNY - Empire Resorts
« Reply #11 on: August 19, 2019, 05:14:38 AM »
Well, that was quick:

https://www.prnewswire.com/news-releases/empire-resorts-to-be-acquired-by-kien-huat-realty-iii-limited-and-genting-malaysia-berhad-300903412.html

Definitive deal for $9.74 / share. Q4 close expected. Only had a 0.5% allocation or something, wasn't quite convinced myself yet. Good to see the thesis worked out this time. Even in hindsight I'm note quite sure a much larger position was warranted (for me). Risky deal, bankruptcy threat, not quite sure about the incentives of the buyer.

Sold my shares premarket around $9.56. Probably too early, might trade higher during opening houders. Still, a <2% spread for a Q4 close implied a very marginal IRR and even with a definitive agreement I'd classify this as slightly more risky than average.

What?!?! Not a 25% allocation! J/K

Very nice trade.

writser

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Re: NYNY - Empire Resorts
« Reply #12 on: August 19, 2019, 06:36:35 AM »
Sold my shares premarket around $9.56. Probably too early, might trade higher during opening hours.

Called it .. (but of course did not do anything with it) Shares trade around $9.69 now shortly after the open. It's a mystery to me who is interested at these prices. If anything I'd rather go short at that level. Perhaps interesting if you want to do an appraisal.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

minten

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Re: NYNY - Empire Resorts
« Reply #13 on: August 19, 2019, 08:13:58 AM »
It's a mystery to me who is interested at these prices. If anything I'd rather go short at that level. Perhaps interesting if you want to do an appraisal.

The author of the original article you mentioned bought the stock (before the sell-off) because he expected a bump in price based on similar takeout scenario's. that's probably still the case for anyone buying today. anyway, i doubt the risk/reward is there, there obviously won't be a competing bid and if shareholders make a fuss Kien Huat could just walk away completely. i sold as well.

writser

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Re: NYNY - Empire Resorts
« Reply #14 on: August 19, 2019, 08:39:42 AM »
Yeah, he expected a bump but that was when there was only a non-binding proposal on the table. It not super unusual for a buyer to open the bidding with a preliminary proposal only to up the price afterwards to placate independent board members and/or shareholders. Clarkstreetvalue discussed a few of these cases on his blog (example, other example). Blog is recommended by the way.

However, in this case the company already announced a definitive agreement, unanimously supported by the independent board committee. I'd say the chance of the 86% shareholder breaking open that definitive agreement again is pretty close to zero percent. Especially given the bankruptcy concerns minority holders don't seem to be in a good position to negotiate now - and they were already in a terrible position to begin with as Genting and the lenders have this company by the balls.

There's no dividend, I perceive the chance of a higher bid to be close to zero yet this is trading at a 0.3% spread. Seems very tight to me. The only explanation that makes sense to me is that somebody is snapping up shares because he/she is optimistic about going to court for an appraisal and even that seems unlikely to me. Just for fun I shorted a token amount of shares around the current price.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Hielko

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Re: NYNY - Empire Resorts
« Reply #15 on: August 19, 2019, 08:48:21 AM »
Yeah, I also don't see how the current spread makes sense. But maybe there is someone who thinks he can make a good case in court that the current price isn't fair. With a 86% holder buying out the minorities it's easy to argue that the process wasn't done in a fair manner. Just have to make a good case that a company on the edge of bankruptcy is worth more :P