Tender Offer Corner
“If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that." - Warren Buffett
When I read this quote, I thought to myself, "surely there is a way for me to get 50% returns annually with my portfolio of less than $1 Million." This has prompted me to read the works of Maurece Schiller, the Father of Special Situations. Schiller's writings were extremely useful and actionable even though they were written over 50 years ago. I was particularly interested in his concept of risk. He talked often of reducing the risk profile of the investments in order to get "romance without risk".
On this page you will be able to see my performance as a tender offer investor. Tender offers are usually flags for other special situations that potential investors should pay attention to. I think of tenders as the seeds of special situations, often they germinate into other special situations that an investor should look for.
ECL Tender Offer Post Mortem
This video discusses my experience with the Ecolab tender for its ChampionX business prior to the ChampionX-Apergy merger. My two week net cash return on an $8248 investment was $9887.69! It would have been greater, but I opted to keep 186 shares of the new company as part of my spinoff portfolio. Therefore, I was essentially paid $1639.69 to take an "romance without risk" equity position around $2000. Not a bad experience, even if the equity goes bankrupt, my roughly 20% net return at this time was more than worth it.
TTPH Tender Offer
You can learn about my second major move into tender offers with this video. I anticipate a 20% cash return by the tender offer closure date. I also anticipate follow on investment benefits depending on how it plays out. DISCLOSURE: my entry price is $2.17/share, expected completion date 10 July 2020.