- ABOUT US
- Whistle-blowers HERE
- CONTACTS - suX, VIPS or Press
- Act Now
- Key Shareholders
- DISMAL FACTS
- Orbis Circles
- Hubris, Hope ... Humilation
- Quotable Quotes, Boondoggles & FY2012 in Review
- Independent Research
- PIGS page here
- Goodies 4U
- PAPER BASICS
- 4 Years of Hubris
- ^ Honour Roll FY2012
- ^ Ref Library
- LIES, DUMB or WEASEL WORDS + SHAME FILES
Jan 16, 2012
How to profit from PaperlinX
Posted January 16, 2012 Twitter: @ PaperlinXsuX
Well known Australian ‘event-driven’ hedge fund manager, and occasional columnist, Tom Elliott ^ describes a sure fire way to make money out of PaperlinX. It was published in the Eureka Report today - see here.
If you hold PPX shares, first take a stiff drink before you read the article.
According to Elliott, it’s an arbitrage play:
· Go short PPX; and
· Go long an equal dollar value of PXUPA.
His aim is to win regardless of the outcome.
1. If PaperlinX is taken over; he reasons there is more upside in PXUPA, because of its blocking capability, than downside risk in being short PPX.
2. If PaperlinX goes bust, you profit on PPX and may profit on PXUPA.
What if nothing happens?
Here we must rely on Tom Elliott’s record in these matters. His hedge fund is ‘event-driven’. Implicit in his commentary is that when companies like PaperlinX are in play, something happens; either:
· A successful takeover occurs which will profit PXUPA more than PPX; or
· Any proposed takeover is thwarted. Historically, failed takeovers usually result the price of the shares falling.
In my opinion, the latter is the most likely scenario with PaperlinX. This is because the PPX holders, led by Orbis, are being foolishly optimistic about the underlying business of PaperlinX and hence the value of their equity.
What will be the NTA of PPX at 31 Dec?
Enter QUIZ here Nice prize.
Pxupa Investors Group Supporters - Join PIGS here
This blog is the personal opinion of the author and not investment advice.
^ Tom Elliott is both Managing Director and a co-founder of MM&E Capital Limited, a
based hedge fund. Melbourne
Before founding MM&E in 2001, Tom was an Executive Director of investment bank Flinders Capital Limited. He has also worked with stockbroker McIntosh Securities Limited, Canadian investment bank Wood Gundy Inc. and retailer
He is a commentator on
radio stations 3AW and 3RRR, and
appears both regularly on the ABC's Inside Business program and irregularly on
the evening news bulletins and current affairs programs of Channels 7, 9 and
Tom holds a Bachelor of Commerce from the
and a Bachelor of Arts
(Philosophy, Politics and Economics) from Oxford University (UK). University of Melbourne