Message Font: Serif | Sans-Serif
No. of Recommendations: 1
On Friday Altaba announced that all shareholders of record as of September 16th will receive a pre-dissolution distribution of $51.50 per share payable on September 23rd. The stock closed on Friday September 6th at $70.09/share.

If you look at the holdings page for Altaba at the IR website which you can see here:

The company still holds 5 million shares of Alibaba stock and has a net asset value of $74.15/share after the company's reserves for liabilities such as taxes. If one elects to hold or buy shares the price of $70.09 - $51.50 should adjust downward to $18.59, the day after the distribution.

The Fund expects that the ex-dividend date for such distribution will be September 24, 2019, the day after the payment date for the Pre-Dissolution Liquidating Distribution.

This in effect will set a new price for the shares which reflect the potential payout above the $18.59 to a total of $74.15 - $70.09 = $4.06/share if the full net asset value is achieved. The question is when does the payout come, how much will it be, and how liquid will the shares trade in the interim. The shares may be delisted from the NASDAQ & trade OTC.

Thought the board would be interested in the potential arbitrage opportunity this situation presents. If management has accurately projected the liabilities of the company & it takes three years to achieve the final distribution that would be roughly a 7%/year return in a world where the ten year note is trading at 1.56%.

Does anyone see where I am missing anything?

Frank - long AABA, see profile for all holdings
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.