Good Morning All
Columbus Day for all the post offices workers out there.
No going to the mailbox today. For us bankers, at least
most of us, buisness as usual. The holidays we used to enjoy
off, no more. Damn, I miss my 13 paid holidays off a year.
What is this world coming to!
The weather in Michigan, who cares.
Hope everybody has a good week,
Julie
in the good ole days, banks used to be called "branches"
now . . thanks to that swindler Vernon C. Hill and his Commerce Bank . . branches are called "stores"
so julietoo . . you're back in retail!
of course we could all use ATM's and electronic transfers . . .
but then we wouldn't get to see your smiling face (or is that smiley face)
38 degrees down the shore this morning . . almost frost on the pumpkins
siri up at the open
as long as Mel hasn't booked any speaking engagements . . it should continue to rise through the CC
john's #'s look good on Q3/Q4
take a look if you haven't already (last weeks thread)
there is still $0.15-$0.20 sitting right here now for the taking . . if you are bold!
To anyone out there who is an "all-in" long . . and does not swing trade . . core or otherwise . .
have any of you considered employing defensive/strategic "put options" to insure against downside risk?
appreciate any perspective . . assume for purposes of this question that under no circumstance would I sell my long position to buy-back at a lower price later . . even in the face of a reverse split
so a put would be my only hedge against downside . . which I would hope and expect to expire out-of-the-money and worthless
just looking for strategy suggestions here . . how much of the long to cover/what ratio etc
p.s. I see you pluc; pay up
I'm still combing through the various filings to provide you with the specific citation . . but here are a few items that will catch your attention:
first . . here is the item you are referencing:
"The Purchaser has agreed not to acquire more than 49.9% of our outstanding common stock for three years. Certain of the standstill restrictions will cease to apply after two years."
then . . consider this ("Purchaser" refers to Liberty):
"4.1 Standstill . (a) Purchaser agrees that until the second anniversary of the Closing Date, without the prior written approval of the Independent Common Directors, none of Purchaser or any of its Affiliates will, directly or indirectly in any way, acquire, offer or propose to acquire or agree to acquire, Beneficial Ownership of any Common Stock of the Company if such acquisition would result in Purchaser or its Affiliates having Beneficial Ownership of 49.9% or more of the outstanding shares of Common Stock of the Company.
(b) Purchaser agrees that from the second anniversary of the Closing Date through the third anniversary of the Closing Date, without the prior written approval of the Independent Common Directors, none of Purchaser or any of its Affiliates will, directly or indirectly in any way, acquire, offer or propose to acquire or agree to acquire, Beneficial Ownership of any outstanding shares of Common Stock of the Company if such acquisition would result in Purchaser or its Affiliates having Beneficial Ownership of 49.9% or more of the outstanding shares of Common Stock of the Company, unless such acquisition or offer or agreement to acquire such Common Stock is made pursuant to a Permitted Tender Offer (for the avoidance of doubt, for purposes of calculating the Beneficial Ownership of Purchaser and its Affiliates hereunder, (x) any security that is convertible into, or exercisable for, any Common Stock that is Beneficially Owned by Purchaser or its Affiliates shall be treated as fully converted or exercised, as the case may be, into the underlying Common Stock and (y) Common Stock and securities convertible into, or exercisable for, Common Stock, that are Beneficially Owned by Purchaser and its Affiliates shall be aggregated).
(4) “ Permitted Tender Offer ” is a cash tender offer for all of the outstanding shares of Common Stock that are not Beneficially Owned by Purchaser or its Affiliates at a price per share greater than the Closing Price of the Common Stock on the trading day immediately prior to the earlier of the public announcement or commencement of such tender offer.
Lastly - watch out for the new short-hedge to come (again, "Purchaser" refers to Liberty):
"Purchaser agrees that prior to December 31, 2009 it shall not, directly or indirectly, enter into any Hedging Transaction or any other transaction, agreement or arrangement the value of which is based upon or related to the value of any securities of the Company. After such date Purchaser may, directly or indirectly, enter into any Hedging Transaction or any other transaction, agreement or arrangement the value of which is based upon or related to the value of any securities of the Company to the extent such Hedging Transaction or such other transaction, agreement or arrangement relates to no more than 50% of the shares of Common Stock Beneficially Owned by Purchaser.
(l) As used in this Section 4.7, the following terms shall have the following respective meanings:
(1) “ Hedging Counterparty ” means a broker-dealer registered under Section 15(b) of the 1934 Act or an Affiliate thereof or any other financial institution that routinely engages in Hedging Transactions in the ordinary course of its business.
(2) “ Hedging Transaction ” means any transaction involving a security linked to the Registrable Shares or any security that would be deemed to be a “derivative security” (as defined in Rule 16a-1(c) under the 1934 Act) with respect to the Registrable Shares or any transaction (even if not a security) which would (were it a security) be considered such a derivative security, or which transfers some or all of the economic risk of ownership of the Registrable Shares, including any forward contract, equity swap, put or call, put or call equivalent position, collar, non-recourse loan, sale of exchangeable security or similar transaction. For the avoidance of doubt, the following transactions shall be deemed to be Hedging Transactions:
(A) transactions by a Holder in which a Hedging Counterparty engages in short sales of Common Stock pursuant to a prospectus and may use Registrable Shares to close out its short position;
(B) transactions pursuant to which a Holder sells short Common Stock pursuant to a prospectus and delivers Registrable Shares to close out its short position;
(C) transactions by a Holder in which the Holder delivers, in a transaction exempt from registration under the 1933 Act, Registrable Shares to a Hedging Counterparty who may then publicly resell or otherwise transfer such Registrable Shares pursuant to a prospectus or an exemption from registration under the 1933 Act; and
(D) a loan or pledge of Registrable Shares to a Hedging Counterparty who may then become a Permitted Transferee and sell the loaned shares or, in an event of default in the case of a pledge, then sell the pledged shares, in each case, in a public transaction pursuant to a prospectus.
(q) “ Qualified Hedging Transaction ” means any transaction involving a Liberty Party, a Qualified Distribution Transferee or any Affiliate thereof whereby the counterparty engages in a (i) short sale, (ii) purchase, sale or grant of any right (including any put or call option), or (iii) forward sale (whether for a fixed or variable number of shares or at a fixed or variable price) of or with respect to, or any loan secured by, any Common Stock or any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from any Common Stock, and such term includes (a) the pledge by any Liberty Party, a Qualified Distribution Transferee or any Affiliate thereof of any Equity Securities in connection with any of the foregoing to secure the obligations of the pledgor under a Qualified Hedging Transaction and (b) the pledge of a Qualified Hedging Transaction itself to secure any extension of credit to a party based, in whole or part, on the value thereof, provided in all cases that the counterparty to such transaction is a financial institution in the business of engaging in such transactions."
Last edited by Sirius Roadkill; 10-12-2009 at 12:28 PM.
from the "Rights Plan"
On April 28, 2009, our Board of Directors (the “Board”) adopted a rights plan to protect against limitations on our ability to use our net operating loss carryforwards and certain other tax benefits (the “NOLs”) to reduce potential future federal income tax obligations. We have experienced and continue to experience substantial operating losses, and under the Internal Revenue Code and rules promulgated thereunder we may “carry forward” these losses in certain circumstances to offset current and future earnings and reduce our federal income tax liability. We believe that we currently will be able to carry forward our NOLs, and these NOLs could be a substantial asset to us. If we experience a future “ownership change,” as defined in Section 382 of the Internal Revenue Code, our ability to use the NOLs could be substantially limited, significantly impairing the value of that asset. The terms of the rights and the rights plan are set forth in a Rights Agreement, by and between us and The Bank of New York Mellon, as rights agent, dated as of April 29, 2009 (the “Rights Plan”).
The Rights Plan is intended to act as a deterrent to any person or group (an “Acquiring Person”) acquiring 4.9% or more of our outstanding common stock (assuming for purposes of this calculation that all of our outstanding convertible preferred stock is converted into common stock) without the approval of our Board. The Rights Plan exempts future acquisitions of common stock by Liberty Radio, LLC and its affiliates, but does not in any respect alter the respective rights and obligations of the Company and Liberty Radio, LLC and its affiliates under the terms of the Investment Agreement dated as of February 17, 2009, between the Company and Liberty Radio, LLC. Any rights held by an Acquiring Person are void and may not be exercised. Our Board may, in its sole discretion, exempt any person or group from being deemed an Acquiring Person for purposes of the Rights Plan.
Expiration . The rights and the Rights Plan will expire on the earliest of (i) August 1, 2011, (ii) the time at which the rights are redeemed pursuant to the Rights Plan, (iii) the time at which the rights are exchanged pursuant to the Rights Plan, (iv) the repeal of Section 382 of the Internal Revenue Code, or any successor statute, if the Board determines that the Rights Plan is no longer necessary for the preservation of tax benefits, (v) the beginning of a taxable year to which the Board determines that no tax benefits may be carried forward and (vi) June 30, 2010 if our stockholders have not approved the Rights Plan.
Second anniversay of Investment Agreement is February 17, 2011
Expiration of Rights Plan is August 1, 2011
Between 2-17-11 and 8-1-11 . . Liberty/Malone holds what effectively amounts to an "exclusive option" to make a "Tender Offer" to purchase all outstanding shares "not beneficially owned by them."
How so?
The "Rights Plan" is prohibitive . . and blocks any realistic prospect of a competing bid.
Mel has publicly stated that the media has misrepresented the "Rights Plan" as a "Poison Pill" . . which Mel say it is not . . and legally, maybe he is right or maybe that is what he really believes or is what he feels bound to say/spin.
But if you run the math . . there would be no-takers based on the dilutive effect of the "Rights Plan" . . it is illusory at best.
Couple the Investment Agreement with the Rights Plan with Liberty's recently realigned capital structure . . sprinkle in AT&T or Verizon . . and draw your own conclusion.
And also consider Liberty's right to hedge/short 50% of their preferreds after January 1, 2010 . .
Disclosure to All: I am not a lawyer. My interpretations above may be entirely wrong. This is only one man's opinion based on what I have read. I have carefully read all of the public filings in an effort to establish a reasonable exit strategy for myself. I am not making any kind of buy or sell recommendation here or offering an opinion as to future share price. This is not a bash post. I am long this equity since 2005 but am considering strategic puts as risk insurance. Do your own due diligence.
Hey SRK, thank you so much for all of this information. That was a lot of work and I appreciate you sharing that with all of us. Now, if I could only figure out what to do about it. You and I have been in this for so long, that it's hard to figure out where the exit point truly is. For now, I'm holding!Originally Posted by Sirius Roadkill
Hey Candle
What I am considering is buying "put options" as a defensive strategy/hedge against any downside risk due to Liberty possibly hedging after 1/1/10 and then possibly in the face of a R/S . .
Now some people would say . . if you think it's going down . . just sell your shares and buy-back later . . but that is not me . . I wont take the chance of getting burned if I'm wrong
But buying some put options would give me an inexpensive insurance policy to protect/hedge the value of my long position should Liberty or the R/S cause a temporary down draft
Tough call here . . hoping someone will post strategy suggestions with "puts"
In the best case . . you hope the "put" expires out-of-the-money and worthless but you at least had peace-of-mind and it was worth paying the insurance premium . .
I've been looking at that stategy too. I'm playing it both ways though. I'm not selling my core, that's for sure. I know that as soon as I let it go, the SP will rise...LOL
So, this is my plan. I am very bullish on the company. I am buying and have bought several hundred call options for March at $1.00. I don't plan on holding them and excersising them. I intend for them to rise to 20 cents a contract during CC runups and selling them for a 100% profit. At the same time, I will buy puts to protect my core shares. I just don't know what price for the puts yet.
SRK, I still think that there is a good chance for the stock to take a big run in the very near future. I don't know about anything over 1.50, but there is a lot of profit to be had between now and then.
Chuck
yes Chuck . . I agree totally . . the run will come . . but Mel has to perform on "top-line" growth now . . . the street is getting tired of cost-cutting already . . not just for this company but others as well
It now has to become a growth story again. Mel has done what he can on the cost side . . maybe squeeze out a few more synergies here and there . . but he has got to push the top-line now . . and maybe by Q4 the lag effect of CFC and CPO will finally start to kick in and really boost revenue . .
I know Mel is running the company to "make money" . . . FCF . . but he has got to convince the street that we are still a growth story here! Too many shares in the float . . and they have got to stop asking for new shares at every meeting . . the share count has more than doubled over the course of our investment Chuck . . they have got to get a handle on that.
Last, I like your strategy . . pure hedge play . . called "creating a straddle" . . please keep me posted as to how it's working . .
I will look at the "puts chain" to coincide with a possible R/S announcement . . expecting a quick downdraft on the announcement . . and right after the split (if needed) then hard rebound hopefully
Trying to look 6 mos out is tough . . cuz my gut says $1.00 week after Black Friday but brain say R/S . .
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