With today’s too-big-to-fail financial environment, it can seem like the biggest banks and financial institutions have an unfair advantage over the little guy. Is there a way that a small, nimble investor can gain an edge?
There is. It’s called Tenderlist.
Tenderlist is an investment strategy focused on corporate tender offers and special situations. The strategy is limited in the amount of money that can be put to work at any given time and is, therefore, ideal for accounts of $5,000-$15,000. Risks are typically limited to cancellation of the underlying deals in which we invest. The strategy has thus far exhibited low volatility, and returns have been very strong.
Q: What is a tender offer?
A: A tender offer is a formal offer from a company to purchase its own stock from stockholders.
Q: What is an odd-lot provision?
A: Companies often have a provision in tender offers in which stockholders of fewer than a set number of shares, most often 100, will have all of their shares accepted without the risk of pro-ration.
Q: What other transactions does Tenderlist participate in?
A: Tenderlist will participate in non odd lot tenders when the risks are acceptable. We also participate in going private transactions, including mergers and reverse splits, and others.
Q: Why is the amount that can be put in Tenderlist only $5,000-15,000?
A: We earn fixed sums on most of our deals, so those fixed sums have a large benefit to a small account. However, as the account gets larger, the percentage returns can be expected to decline. As an example, a $100 gain on a $5,000 account is a 2% gain, whereas a $100 gain on a $20,000 account is only a 0.5% gain.
Q: What do you recommend for accounts that grow beyond $15,000?
A: At present, we will selectively allocate surplus amounts into special situations such as liquidations, where we think the outcome is highly asymmetric.