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 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 Country
Road
He is a commentator on Melbourne
Tom holds a Bachelor of Commerce from the University of Melbourne
Your second point is wrong.It should be if there is no takeoverr, then PPX should rise in the short term.
ReplyDeleteIf PaperlinX goes bust neither PXUPA will get payed a cents, after employees and key devotes are paid.certainly PPX will get nothing as well as they. Rank behind hybrids.
By the way I think PPX will drop to 4 cents, and PXUPA will eventually rise to $34. That equates to a $120 million takeover bid with 20%going to ordinary shareholder and 80% to hybrid holders.
Ed: 3 points, in order of simplicity.
ReplyDelete(1)If you anonymously send your NTA estimate, but in accordance with the Rules, you will be in the running to win the quiz.
(2)If PaperlinX goes bust, your view seems harsh from figures I've seen.
(3) If there is no takeover, historically shares usually fall.
HOWEVER, if I was always correct, this blog wouldn't exist. I'm sure others will comment.
Just lovely, hedge funds/speculation and you tall foreheads who view yourselves as some kind of financial genius's wonder how the world has got into this financial mess.
ReplyDeleteGREED
Good article in todays AFR.
ReplyDeleteI also suspect PaperlinX may have deliberately attempted to cheapen the price of the hybrids to narrow the valuation gap between the hybrids and the up and coming takeover bid.
Hence ACCC were involved.
If it is true, I think James Orr and other directors should be off to jail. I think James is probably sweating perfusely. He probably tried to be too smart, trying to justify his position as lawyer within the company and chairing the meeting. Shame. I did notice a major turn around in James approach to enquiring hybrid holders immediately after the ACCC were involved.
Now, thanks to Gaby Berger, progress will be made as to if this is true.
As mentioned I feel PPX will fall to 4 cents and PXUPA will rise to $34
Ed: This appears to be the same commentator as before, with the 0.04/34.00 price estimate and allegations re ACCC.
ReplyDeleteIf you wish this allegation to get an airing, please send a confidential email to paperlinxsux@gmail.com. I'm the only person who can access that email.
Over to you.
You people are merely engaged in a tranparent attempt to manipulate the market price of your investments.
ReplyDeleteYou are also a bunch of clowns. You got taken in by that dodgy prospectus put together by Macquarie Bank and then you turn around and try to lay the blame everyone but yourselves.
Mr Elliott - son of big John (didn't he have something to do with elders? How are those ELDPA's travelling?) . Has he calculated borrow costs? Say borrow costs are 100% for short position? Not so simple. Or you get bought in and can't maintain the borrow? I thought this guy is a hedge fund manager.
ReplyDeleteEd: Interesting but essentially unhelpful history about Elders. ELDA travelling better than PXUPA, see http://www.paperlinx-sux.com/2012/01/pxupa.html
ReplyDeleteI supplied Tom Elliott's article and fleshed it out for readers. From what I hear he is a successful event-driven hedge fund manager.
Referring to todays 17 Jan. article in the AFR, I hope Gaby Berger gets to the bottom of the possible deliberate cheapening of the hybrids via the Responsible Entity, The Trust Company, ridiculous impairment valuation wiping off $188 million from hybrid funds.
ReplyDeleteGaby will be no doubt be aware that on 20 Dec Michael Britton resigned as director of The Trust Company. I am sure Gaby would like to interview Mr Britton to see how much, if any, influence PaperlinX and probably James Orr had on such a need, or level, for an impairment valuation. Maybe there was no influence.
Note also Mr Britton left after ACCC were involved, which is before the website PaperlinX Sux began.
Ed to ANON who sent a comment at circa 9:30 pm Tuesday 17 Jan re today's AFR etc - I really cannot allow that to be published. The party named cannot defend themselves.
ReplyDeletePlease trust me by emailing directly and confidentially to paperlinxsux@gmail.com.
Please
You are a bunch of clowns.
ReplyDeleteYou foolishly believed the nonsense contained in the PPXUA prospectus, without bothering to read the terms, and now you're flailing around trying to find someone else to blame.
You people are a bunch of clowns.
ReplyDeleteYou were taken in by a Macquarie Bank prospectus, without even bothering to read the PXUPA terms, and now you are flailing around trying to find someone else to blame for your own stupidity.