|Shares Out. (in M):||1||P/E||21.7x||N/A|
|Market Cap (in M):||243||P/FCF||10.1x||N/A|
|Net Debt (in M):||0||EBIT||62||0|
Although illiquid, I couldn't resist letting VIC members know of this 300%+ IRR opportunity, that is easily hedged. The big assumption is being able to buy a position near today's price. Alleghany Corporation (Y) is a NYC based $2BB market cap P&C insurer. The common stock Y trades for $260/share. There is a 1.13mm share preferred issue that last traded at $215 and mandatorily converts on 6/15 this year at a variable convert ratio somewhere between a minimum of .8994:1 and a maximum of 1.0613:1. In addition, the last dividend of $3.8036 goes ex tomorrow.
The convert ratio is the average of the 20 trading days prior to 6/15 convert date. Today is the 8th day and 12 more trading days before conversion. The average so far assuming a $260/share close today is $264.30. The threshold appreciation is $249.34, so the ratio is currently at .9433, or $245.28 parity ($260 * .9433). With the preferred at $215, that is $34.08 gain on $215 cost, 15.8% return in 18 days or over a 300% IRR.
The borrow on Y is available to create an excellent arbitrage opportunity. Y is a well managed, underleveraged insurer that trades below book so perhaps a hedge is not necessary but I would rather not risk it.
I realize liquidity is pitiful and this trades spotty so not expecting a great rating, but I was able to get a little stock today. Just another indication that the market still offers inefficient, compelling investment opportunities.
|Entry||05/27/2009 06:11 PM|
It seems they've made anti-dilution adjustments to the ratio and price triggers. Where can I find details?
|Subject||Nice idea but...|
|Entry||05/28/2009 09:54 AM|
Nice idea but bid is $240 on the preferred and $253 on the common this morning.
|Entry||06/03/2009 02:54 PM|
but the detail on the write-up is not very good...confusing