I recently came across some interesting statistics regarding blogs….Roughly 80% of the top 5,000 or so blogs have two or more posts per day. For the last 5 or 6 months this blog has averaged…oh…about…ONE POST A MONTH! While I don’t really have any aspirations to be one of the top blogs in the world, these statistics did make me face the reality that this blog is very sub-par.

Now before I continue beating myself up, I will point out that it was determined that most of what I had previously been blogging about (arbitrage investments, special situations, etc.) would be better discussed privately. So while the public blog has been extremely quiet since June, we have had some decent and profitable discussions happening on the members-only discussion board.

That being said, I still have to admit that I have dropped the ball a bit lately. I have some valid excuses: a full-time job, starting a small side-business, working on a second master’s degree, and preparing for the birth of our first child. However, I don’t think time constraints are the primary reason I don’t write. It isn’t a lack of things to share or discuss either…I think of things all the time. I think my problem is that I don’t know where to start, I feel like I have to stay on some sort of topic, and I’m a little hesitant to open-up and share my thoughts.

I’ve never been one for resolutions, especially New Year’s Resolutions, since 97.3% of them don’t last past March (ok, I made that up…but it’s probably in the ballpark); however, today I’d like to resolve to be a better blogger. It may not mean multiple posts a day or becoming one of the top 5,000 blogs in the world, but it does mean that I’ll try harder. I’m not going to set a goal…just resolve to do better…I guess anything is an improvement on one post a month.

What will I blog about? I’m not sure…probably a little bit of everything. The content will likely have an investing/business/technology slant as those are some of my interests. Hopefully there will be some people out there that find what I have to say to be somewhat interesting, and hopefully they will feel free to share their ideas, opinions and interests too. We will see where this goes.

I will continue to manage the members-only discussion board. Any specific discussions regarding arbitrage opportunities will be conducted on the discussion board rather than the blog. By the way, Welcome! Daniel and Chris, (our two latest members) we look forward to sharing ideas with you and getting your input.

So, this is my post for the month of November. One more post and I’ve already made an improvement!

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On April 14, 2008 I wrote about the Allscripts (MDRX) / Misys (MSY) Merger (announced in mid-late March). Since then the merger has been discussed a bit more on the member’s-only discussion board. For some time there was uncertainty about the merger due to lending issues (Lehman Bros. collapse). Today it was announced that the funding is in place and shareholders are in favor for the merger to move forward. You may be interested in this just for the special dividend, I still happen to like MDRX and plan to keep in in my portfolio. Here are the details of the special dividend:

Misys is paying $330 million for a 54% stake in MDRX.

The special cash dividend is in the aggregate amount of $330,000,000; the corresponding per share amount of the special cash dividend will not be determined until the actual number of shares of Allscripts common stock outstanding as of the close of business on the record date of October 9, 2008 is determined.

The special dividend will be in the ballpark of $4.90 per share. MDRX is currently trading at $11.40/share. I last bought at $8.80 in March.

Record Date: October 9, 2008
Transaction Date: around October 10, 2008
Payment Date: around October 17, 2008
Ex-dividend Date: October 20, 2008

The above is subject to “customary closing conditions.”

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Based on the recommendation of a member of the discussion board (and after some additional research), I bought Interactivecorp (IACI) for $17.72 per share on August 19. Later that week InteractiveCorp spun-off four divisions: Lending Tree, Home Shopping Network, TicketMaster, and Interval. For each share of IACI I received 1/5 of a share of HSN, ILG, and TKTM and 1/30 of a share of TREE. IACI shares underwent a reverse split following the spin-off.

Today I received the spin-off shares in my Scottrade account. Already I’m up 12.5%; however the intent of this is not to make an immediate buck, but to give the spin-offs a year or two to take off. So I’ve got to work on my patience and continue to monitor these 5 companies.

Much thanks to Eric for his detailed analysis of the transaction on the Members-only Discussion Board.

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Today I sold my shares of KRE for $30.00 per share. I was tired of holding it and hoping the price would rise and make my decision to purchase not look so bad (I’m learning to put asside any emotional attachments to stocks). I purchased KRE for $45.25/share on August 23, 2007 after Jim Cramer talked the ETF up like it was the best investment ever….I should have know better. The logic was that the Fed Rate Cuts would help the Regional Banks and KRE would move upward (link to original post on KRE). Well, the cuts happened but over time KRE just dropped. I think Cramer was a little optimistic on the economy. So I took a 34% hit on this one.

On a positive note, I quit watching Cramer soon after KRE started going south last year (plus I got busy and was tired of his tirades). Since then I’ve focused mostly on arbitrage situations and have done a lot better.

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It has been a while since I’ve written a public post. For the last six weeks all of the activity has taken place on the member’s discussion board (160+ posts so far). Any investments I discuss on the public side of this site will now be after-the-fact. Which brings me to the first payout I’ve received as a result of the discussion board (a few others are in progress).

About two weeks ago one of our members (Cogitator) brought to our attention a tender offer for URI. This offer gave special priority to odd-lot holders, which means that they would be the first to be cashed-out. At the time URI was trading between $19-20 per share. The tender offer amount would be between $22-25 per share.

On July 9 I purchased 49 shares at $19.75. The next day I purchased 50 more for $19.50. The deadline for the TO was July 16. The shares settled in my account on the 14th and 15th. I called Scottrade and let them know that I wanted to tender my shares. On the 16th my shares were delivered out of my account. Today the cash was deposited into my account (at $22/share)…a very quick $200.

It turned out that so many people wanted to tender their shares that only 1/3 were actually tendered. However, because I owned 99 shares (an odd-lot holder) I was pretty-much guaranteed the money.

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The member’s only discussion board has been open for about three weeks. So far we have over 20 active members with 72 posts on 18 different subjects. If you’d like to be member on ryanhegs.com we are still accepting applicants. Our members have a wide range of experience: we have CPA’s, MBA’s, a former stockbroker, a hedge fund analyst, a stock-based compensation consultant, a few day traders, some college students, new investors and veterans with 10-20 years of experience. If you think you would be an asset to the community we’d love to have you. Eventually we will put a cap on the number of members and start kicking off the freeloaders (those not contributing insight or information). To join click the register link on the left side of the page.

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Today FBSI announced that the pending reverse split was terminated. Here is some text from the filing:

On June 10, 2008, First Bancshares, Inc.’s (”Company”) Board of Directors
announced that it had terminated its plans to reduce the number of
stockholders below 300 in order to terminate the registration of the Company’s
common stock and to suspend its reporting obligations with the Securities and
Exchange Commission (”SEC”). This was to be accomplished through proposals to
amend the Company’s Articles of Incorporation to provide for a 1-for-500
reverse stock split, followed immediately by a 500-for-1 forward stock split,
which proposals did not receive stockholder approval at the Company’s Annual
Meeting of Stockholders held on June 10, 2008. As a result of the defeat of
these proposals by stockholders, the Company will continue its reporting
obligations as an SEC-reporting company.

Link to Form 8-K

I’m glad I wasn’t long for this one. It will be interesting to see how people’s short plays turn out.

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Just a reminder that FBSI will have its annual meeting tomorrow (Tuesday) at 1:00pm Central. Tomorrow afternoon we should know whether the shareholders voted in favor of the reverse split or not. Although they may vote in favor of the split this does not make it a done deal. There are still significant financing concerns, as I (and others) have written in previous posts.

For a more detailed discussion of FBSI, register for an account so you have access to the member’s only discussion board.

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Yesterday my remaining CPTH shares were cashed-out by Scottrade. I originally posted about the Critical Path arbitrage opportunity on December 16, 2007. I purchased CPTH on December 26 for $0.076/share (purchased 13,000 shares). I was able to sell 12,500 shares on April 14, 2008 for $0.102/share. The remaining 50 shares moved in my Scottrade account on May 6 and were finally cashed-out on May 29th. I made around $350 on this transaction (about 35%).

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If you haven’t been paying attention to the comments, this post is for you. For the last 10 days we’ve been talking about the next potential arbitrage play in the comments (not by name until recently). For many of you this has already come across your radar. If it hasn’t, or if you are looking for more information, here are the facts on First Bancshares Inc.:

* The company first filed documents indicating their desire to go private in late February (Schedule 13, PRE14A) at this time they were planning on a 1:1000 reverse split with fractional shares cashed out at $21.

* According to the filings the Directors and Exec. Officers own just shy of 4% of the shares. Another 17% are held by family members. This means that they need another 30% of shareholders to vote in favor of the split - the majority of whom are likely individual investors

* The February filings state that FSBI anticipated paying out $2.5million for the fractional shares. They estimated that outstanding shares would decrease by about 8% or 119,736 shares.

* In April the company changed the terms to a 500:1 reverse split, fractional shares still cashed out at $21/share (SC 13E3, PRER14A)

* At the time of these filings they anticipated paying $2.7million for fractional shares (this time based on a split half the size of the first). They indicated that they anticipate that this number will go up and cite a $5 million dividend that FBSI will be receiving as sufficient working capital to fund this transaction.

* FBSI intends to treat beneficial holders (street name) the same as record holders, however they give repeated cautions that this is ultimately up to how your broker handles it.

* Shareholders will vote on the transaction on June 10, 2008

So the questions are:
1. Will this get approved by shareholders? Keep in mind, only 20% of shares are held by Execs. and family. With 9.6% instutional ownership (Reuters) that leaves the decision in the hands of a lot of individual investors, who may not be crazy about cashing out the fractional shareholders, let alone holding this stock once it is de-listed.

2. Can the company afford it? $5million may not be enough to cover the number of small lots that have been purchased since the filings. The fact that the terms have been changed once already shows that FSBI probably realizes that they may have difficult funding this.

While the potential payout is sizeable (currently trading around $14), the general consensus from commenters is that it may be better to sit this one out as it is much riskier than many of the other opportunities that have come along. Before I looked into this one I foolishly purchased a handful of shares with the intention of purchasing more once I did more homework and got some feedback from a respected source. I ended up selling my shares for a minimal loss a few days later. I decided I would rather lose a little now than a lot later.

So why am I posting this? I think this is an excellent opportunity for those new to these situations to read through the filings and understand how things work. If you are new and take the time to read the filings I’ve linked above I guarantee you will learn a lot. They are pretty detailed and the April SC13 give a lot of helpful definitions (if you don’t mind sifting through a lot of financial reports). If you are new I wouldn’t recommend putting any money down on this situation. Get educated, become a member so you have access to the new discussion board, and wait for something that looks more or less like a done deal.

Kudos to Robb, Chad, Tom and others who have done a good deal of research on this arbitrage situation. Read through the comments to learn more….Chad has a different approach on this that I’m giving some thought to.

FYI - from here on out I intend to discuss the majority of these situations in the members only section. Membership is open for applicants right now (just need to register and provide a few sentences about your experience and desire to join), but I will limit the number of members down the road. I’ve got a nice discussion board setup with a few advanced features…depending on how things go I may add some additional tools in the coming months. The public blog will continue, but most of the news and conversation will hopefully take place privately. Click here to register.

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