Author Topic: SSW - Seaspan  (Read 138576 times)

VAL9000

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Re: SSW - Seaspan
« Reply #290 on: December 13, 2011, 09:52:26 AM »
I can't explain the price fluctuations, but the only sensible guesses I could come up with are:
 - The tender offer of $15 will only apply to 10mm shares, so there is risk that you won't get this price if you bought today, hence it wouldn't hover at $15.
 - It could be that after a price decline of $20 to $10.xx a lot of people had limit sells between $11 and $14, which would have been triggered this morning.
 - Some people could just be exiting after getting in over the past few weeks at < $11.  Good trade.



manualofideas

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Re: SSW - Seaspan
« Reply #291 on: December 13, 2011, 10:52:13 AM »
It seems less than optimal that the company would pay $15 per share.  They could probably buy back shares for a lot less if they just spread out the buyback over a few months. 

We wonder if there is a back-story to this.  Could it be that one of the large shareholders margined their stake and now needs to meet margin calls.  A short-term pop would greatly alleviate any pressure from margin calls even if such a pop is not optional for the company over the long term. 

It would be good to understand the real reasons behind this seemingly unnecessary tender at a huge premium to market.

VAL9000

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Re: SSW - Seaspan
« Reply #292 on: December 13, 2011, 10:59:35 AM »
It seems less than optimal that the company would pay $15 per share.  They could probably buy back shares for a lot less if they just spread out the buyback over a few months. 

We wonder if there is a back-story to this.  Could it be that one of the large shareholders margined their stake and now needs to meet margin calls.  A short-term pop would greatly alleviate any pressure from margin calls even if such a pop is not optional for the company over the long term. 

It would be good to understand the real reasons behind this seemingly unnecessary tender at a huge premium to market.

It could have to do with the $54mm stock buy-out of the management firm that they also announced.  $54mm in $10 shares is more costly than $54mm in $15 shares.

Not sure that's enough to do it, though.

I agree that it's an odd way to approach a buy-back.  Does anyone have other examples of buy-backs that are similarly structured?
« Last Edit: December 13, 2011, 11:01:15 AM by VAL9000 »

VAL9000

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Re: SSW - Seaspan
« Reply #293 on: December 13, 2011, 11:13:04 AM »
It seems less than optimal that the company would pay $15 per share.  They could probably buy back shares for a lot less if they just spread out the buyback over a few months. 

We wonder if there is a back-story to this.  Could it be that one of the large shareholders margined their stake and now needs to meet margin calls.  A short-term pop would greatly alleviate any pressure from margin calls even if such a pop is not optional for the company over the long term. 

It would be good to understand the real reasons behind this seemingly unnecessary tender at a huge premium to market.

I saw a decent explanation for the tender offer on the Yahoo board:

Quote
Look at average daily volume for the last 3m. It is 270,000 so if they want to buy 10,000,000 shares without affecting the price that much they need to buy about 10-20% of the daily volume each day. So to buy 10m shares they will need entire year of daily buying (I the mean time they have to pay dividends on these shares). It is much easier, faster and might be actually cheaper just to buy them in one block.

Santayana

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Re: SSW - Seaspan
« Reply #294 on: December 13, 2011, 11:42:12 AM »
I can't explain the price fluctuations, but the only sensible guesses I could come up with are:
 - The tender offer of $15 will only apply to 10mm shares, so there is risk that you won't get this price if you bought today, hence it wouldn't hover at $15.
 - It could be that after a price decline of $20 to $10.xx a lot of people had limit sells between $11 and $14, which would have been triggered this morning.
 - Some people could just be exiting after getting in over the past few weeks at < $11.  Good trade.



Will be interesting to see how it trades over the next few days.    If they announce another div raise this spring, $15 might seem pretty cheap.  I'm glad I added to my position last week instead of waiting any longer.

lessthaniv

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Re: SSW - Seaspan
« Reply #295 on: December 13, 2011, 01:59:56 PM »
I can't explain the price fluctuations, but the only sensible guesses I could come up with are:
 - The tender offer of $15 will only apply to 10mm shares, so there is risk that you won't get this price if you bought today, hence it wouldn't hover at $15.
 - It could be that after a price decline of $20 to $10.xx a lot of people had limit sells between $11 and $14, which would have been triggered this morning.
 - Some people could just be exiting after getting in over the past few weeks at < $11.  Good trade.



Will be interesting to see how it trades over the next few days.    If they announce another div raise this spring, $15 might seem pretty cheap.  I'm glad I added to my position last week instead of waiting any longer.

Seems cheap now.
If they get the tender of 10M and cancel those shares you'll have the current dividend pouring over a smaller share count.
I have no plans to tender though ... but I sure there are lots of traders who would.

I think it's cheap at $15 especially with a bump in dividend/share assuming those shares are cancelled.
<IV

finetrader

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Re: SSW - Seaspan
« Reply #296 on: December 13, 2011, 04:18:58 PM »
the float is 50m shares. So if Seaspan buy 10m shares you can expect that you will be able to sell 20% of your shares at 15$.

The premium is 43.5% over the december 12 2011 closing price , so you can expect a gain of 0.20*0.47%=9.4%

So the arbitrage price is about 10.45$*1.094=11.43$  , add another premium for the awareness of the market that management think that the 10.45$ was too low and this will get you to today's closing price of 12.16$.



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Uccmal

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Re: SSW - Seaspan
« Reply #297 on: December 13, 2011, 07:18:18 PM »
the float is 50m shares. So if Seaspan buy 10m shares you can expect that you will be able to sell 20% of your shares at 15$.

The premium is 43.5% over the december 12 2011 closing price , so you can expect a gain of 0.20*0.47%=9.4%

So the arbitrage price is about 10.45$*1.094=11.43$  , add another premium for the awareness of the market that management think that the 10.45$ was too low and this will get you to today's closing price of 12.16$.


Brilliant!
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alertmeipp

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Re: SSW - Seaspan
« Reply #298 on: December 13, 2011, 07:38:53 PM »
so 150m spent to buy 10m shares .... and mark to market loss of above 30m right after all said and done, brilliant.
pps will probably drift downward soon after.. why not just a normal bid issue.

Uccmal

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Re: SSW - Seaspan
« Reply #299 on: December 14, 2011, 06:27:33 AM »
so 150m spent to buy 10m shares .... and mark to market loss of above 30m right after all said and done, brilliant.
pps will probably drift downward soon after.. why not just a normal bid issue.

I was referring to finetrader's working out of the stock price, not SSW buying shares back at $15.

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