One of the best opportunities to learn is when reviewing mistakes, and in the case of Fibrek I certainly made one. I did not properly read the tender offer documents and assumed (you know what they say about assumptions…) that enough cash was available to not get prorated and get partly paid in ABH shares. While in total there was enough cash, this was not all available since the amount of available cash was prorated based on the number of shares tendered. ABH also dropped since the tender offer was made making the deal value lower than the all cash result.
I’m guessing that I’m far from the only one who missed this, because ABH managed to get several millions of shares accepted the past weeks while the market price of FBK was at all times above the deal value. Thanks to this I managed to reduce my losses a little bit because I did catch this before tendering my shares, and sold my shares back to the market yesterday at a loss. At yesterdays close the deal value (0.55 + 0.0284 * 12.37 = CA$0.901 ) and price of FBK ($CA0.90) was nearly identical .
So what lessons should I learn from this:
- Never be lazy reading the details in important documents.
- Don’t cut corners when something is time sensitive: if I don’t have enough time to do proper research, just skip it.
No FBK.TO position anymore
I admire your frankness about mistakes.
Be careful though with using the word “should”: a lot of people use this when they are not willing to follow through on what they think they “should do”. Saying “I will always read all important documents” sounds a lot more committed then “I should..”.
Keeping myself accountable was part of the reason of starting this blog, and certainly expect to make plenty more mistakes; but hopefully not the same one twice… and think you might be reading a little bit too much in a single word, but I do understand your point; there is certainly a difference between doing it and knowing what you should be doing.
Wasn’t this pointed out already by a commenter on your previous blogpost? Think I even specifically asked you about this, but not sure.
Almost, someone wrote that I would get prorated, but not why, so initially I thought he was basing his thoughts on the idea that there would be proration risk if everybody would tender.
You should have headed my warning about the proration. Leave arbitrage to the professionals. It was mopes like you that cost us a lot of money on FBK – if no one tendered, ABH would have raised their bid substantially. Thanks (sarcasm)
1. People doing stupid stuff is exactly why there are money making opportunities, so be happy.
2. I actually tendered to the Merc bid since I had bought the shares already anyway