Vacuum up Free Money! Odd Lot Provision on NASDAQ:HCT Tender Offer

ART

That’s right! Free money awarded to those that keep their ear on the pavement and can spot these opportunities as they arise! NASDAQ:HCT – known as American Realty Capital Healthcare Trust is placing a tender offer (with an odd lot provision) on its shares at $11. When reviewing tender offers one needs to carefully read the provisions section. This area highlights the rules and regulations of this tender offer and how an investor should educate themselves on the situation.

How can an Investor capture the Returns?

After reviewing the odd lot cutoff number (in this case 100 shares) an investor can then go to the market: (NASDAQ:HCT) on Yahoo Finance or (NASDAQ:HCT) Google Finance and purchase a MINIMUM of 1 share less than the odd lot cap. In this example of HCT: purchase 99 shares or less.

Duration of the Investment

After making your purchase, your broker will send you your odd-lot voting rights. You would choose the ballot option: tender my shares at $11. After the withdrawal period (May 2nd 2014), HCT will tally all the votes and make begin the share tendering process (this should take about up to 10 business days to settle in your account. Please note that HCT has a cap of 13.6m shares it can tender, and will start by buying out all odd lot holdings. Just be cognizant in future situations that there is an importance on who gets tender offered first and the maximum shares the company can buy.

Do I really make 7.5% in one month?

Lets say you purchased 99 shares today at $10.10 per share and the transaction settles in your account on May 9th (being one month from today). Well your investment of (99 shares*$10.10)= $999.90 + a $9.95 broker fee brings the total cost to: $1009.85. On May 9th you receive back: (99 shares * $11.00)= $1089.00

This makes your gains: ($1089.00 – $1009.85) = $79.15. Divide that by your original investment to obtain your ROI: ($79.15/$1009.85)= 7.95%
Pretty easy and stress free way to make 7.5% in one month…if you could find one of these every month and replicate it, that would make an annualized yield of 90%.

Lets review the tender offer information for NASDAQ:HCT

Tender Offer Letter

Some other things that are notable about NASDAQ:HCT

Chairman: Nicholas Schorsch

1

ARC Healthcare is “a little more nimble, a little more focused,” than the largest health care REITs, according to Nicholas Schorsch, executive chairman of ARC Healthcare’s board of directors. At the same time, about 63 percent of its tenancies have investment-grade ratings, which the company estimates to be about double that of its nearest peer.

Schorsch said he anticipates that ARC Healthcare could eventually fall somewhere between the midsize health care REITs that hold $2 to $3 billion in assets and the largest health care REITs that own around $30 billion in assets. As of now, the company has an enterprise value of about $3 billion.

“I don’t think there’s a limitation as to what size we want to be, but we want to own assets we believe will perform well for decades to come,” Schorsch said.

HCT CEO: Tom D’Arcy

3

“We have strong capitalization, a very focused strategy and (we are) a proven acquirer of high-quality assets. We feel really good about our ability to grow our company on an external basis,” HCT CEO Tom D’Arcy

Sources

REIT.com News

EDGAR

4 Responses

  1. licid1 says:

    Can you do an ELI5 on this article?

    • Fat Pitch says:

      So this companies has plenty money in the bank and their management knows that by buying back their own stock they will earn a higher return on their money, compared to funding new projects.

      There are many other benefits in doing this besides having total share count drop from $183m to $150m. Including, but not limited too: Increasing management control, future leverage positioning, realizing close end to market cycle.

  2. THUMB5UP says:

    After capital gains tax and the Sell fee, you actually only see a return of 5.005%.
    (1089-(999.90+9.95+9.95+17.29))/(999.90+9.95+9.95+17.29)
    = 5.005% or a Net Gain of $51.90

    • Fat Pitch says:

      Use your IRA and you waive the taxes…with the downside of not seeing the money for a long time…talk to your broker and get on their good list, can do wonders for lowering commissions…

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