Special Situation Investing

Wednesday, February 07, 2007

A Few Things

Tyco dropped .62 today, to $31.97. Even though I own shares, I can't help enjoying this as I would really like to put some more money into the thing. Really, the more I think about it the more I like it. Let's just see the price get down a little further.

Decent article over here about a turn-around in progress at RadioShack. My problem with this one is that the company's revenue to market cap is already pretty high at .7 or so. Walmart, in comparison, has a rev/market cap of .65. So it's priced high and we're still in the opening innings of the turn-around. Not going to bite at this one.

Good top-10 list here of some value stocks. The thing I like about this one is that there is an explanation of why each stock is a buy.

2 Comments:

  • Hi, I saw your blog yesterday after i invested in Altria...I was wondering if you could set me straight on something, as I am new to investing... When MO splits with Kraft, will I recieve.7 shares of Kraft for each share of MO, and still keep my shares of MO, or is it some kind of exchange? Will I recieve my shares if i invested after they announced the spinoff? Sorry for all the questions, but i'm a bit confused...

    By Anonymous JR, a random investor, at 3:38 PM  

  • Okay, first of all this is only my personal analysis and refer to the disclaimer as far as my responsibility.

    From reading the material, it seems you will be receiving .7 shares of Kraft and KEEPING your MO shares. That is generally how spinoff's work However, to counter-balance the fact that MO won't own Kraft anymore, you are going to see MO drop off by a roughly comparable amount (whatever value .7 shares of Kraft is) after the spinoff. So maybe you have an $85 MO share one day, the next, $62 MO share and .7 shares of $34 Kraft shares. If you do the math it's the same thing. In reality, often after a spinoff the sum of the parts is more than it was the day before. Usually by only a few percent but it's not uncommon.

    There are exceptions, in Weyerhaeusers case, it's optional whether you want to tender your shares.

    As long as you a registered owner at the spinoff time you should get shares. I don't know the exact specifics, but if you already own them you shouldn't have to worry about it.

    Hope that helps. For legal reasons, I can't really GUARANTEE this to you but this is what I believe. I would recommend reading the material on MO's site if you want to be certain.

    By Blogger spinoff, at 4:01 PM  

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