Stock Opportunity: FTV ($350+ Potential Profit)
Posted: Mon Sep 10, 2018 8:18 pmFINAL VERSION- ANY FURTHER CHANGES/CLARIFICATIONS WILL BE MADE IN A SEPARATE REPLY TO THIS POSTING.
I'd like to keep this one fairly short and sweet but the process is a bit involved. BOTTOM LINE: If you have a brokerage account with an extra $8,500 or so to invest, I have a way you should be able to make (conservatively) $350 or more in the next month or so. Realistic profit is probably more like $400-1,000+ per person with an approximately 97%+ chance of the deal being profitable. Not a guaranteed profit, but very close to that.
CLIFF NOTES VERSION OF THE PROCESS:
1) Buy up to 99 shares per tax ID of Fortive (FTV) stock.
2) Contact your broker to indicate that you want to tender all of your shares to exchange for Altra Industrial (AIMC) stock.
3) Exchange deadline is 9/26 (W), but your broker's deadline will likely be much earlier- mine (Schwab) is 9/21 (F) at 7pm ET.
4) Approximately 6-8 days after the exchange deadline you will receive approx. 200+ shares of AIMC stock in exchange for your 99 FTV.
5) If possible and profitable, sell your AIMC stock as soon as you see you have it and can sell profitably.
STILL INTERESTED? Here is what you need to do. First you need to have a brokerage account with somebody where you can buy stocks. It doesn't really matter who the account is with, as long as they don't charge sky high commissions. Right now Fidelity and Schwab both have $4.95 online commissions. Plenty of others are under $10. Note that if you have, for instance, a 401(k) account with your employer, you will likely only be able to buy mutual funds and almost certainly will not be able to participate in this transaction.
Realize you are going to pay the regular online commission to buy no more than 99 shares (per tax ID) of FTV (Fortive Corp.) stock- simple enough. There will then be a Reorg fee for your broker to tender your shares, whether you do it online or call a person at the brokerage firm to process your trade. This is different than the online commission as there is more work for the broker to tender the shares. I'm guessing the Reorg fee will be from $25-45 per account- again it varies from broker to broker. There will then be another commission when you sell the stock, so two commissions plus a Reorg fee.
Now the good stuff- Fortive Corp. (Ticker: FTV) is selling part of their business to a another company called Altra Industrial Motion Co. (Ticker: AIMC). If you buy 99 shares of FTV stock and validly tender all the shares, they will be converted into a different number of shares of Altra stock by early-October. You should have approximately 200 or more shares of Altra as it is a cheaper stock than Fortive. The exact number of shares you get is determined by a complicated formula and won't be known till September 24th. As soon as you get the Altra stock, check the value of the stock to make sure you have a fair enough profit and then you can sell the stock right away if you'd like to pocket the profit.
FTV is putting in an 8.7% kicker, meaning they want shareholders who do this to make an approximately 8.7% profit on the deal. The actual percentage that you make will likely be more or less than this amount; in the past the actual profits have tended generally to be somewhat more than the original estimates.
This is what is referred to as a Reverse Morris Trust (RMT) transaction. Don't worry about the term RMT- it is merely a legal provision to enable them to do this without it being taxable to the company. It still could be taxable to YOU as a shareholder, so if you can trade in a retirement (non-taxable) account, all the better.
Important consideration- why not buy more than 99 shares? Because you will likely lose money if you do. At the very least you will be taking on a lot more risk. FTV has a clause which says that beneficial owners of 99 shares or less who tender all of their shares will have all of them taken. If you have 100 or more shares, they will almost certainly take only a small portion (perhaps only 10-15% or less) of the shares and return the rest to you. So you could have a decent profit on 10-15% of your position and likely lose money on the other 85-90%- not a good recipe in my book. Who says wealthy people and hedge funds have all the advantages? Not in this case!!!!!!!
For those who have friends/loved ones with brokerage accounts, you can buy 99 shares in each person's account if you like, validly tender all shares with your broker, and all the shares will be taken. That is, you will NOT be prorated! The brokerage firm you have your account(s) with basically looks at the social security number of the person who owns the account to determine beneficial owner. For a joint account, they look at the person listed first and use their social security number. Parents who have lots of kids can really clean up on deals like this as they can buy up to 99 shares for each kid in the house!
Questions about the 99 share amount:
1. Q: Can you buy less than 99 shares if you don't have enough money to do 99? A: Yes, but please determine in advance that you will still be likely to make a profit. Also, you must tender all your shares. For instance, if you buy 50 shares, you must tender all 50.
2. Q: I have 50 shares in an account that is managed for me. Can I still buy 99 in my self-directed account and tender them? A: If you buy 99 you will be the beneficial owner of 149 shares and almost certainly be prorated and have the vast majority returned to you. Even if you tender only 99 of 149 shares, you will have the majority likely returned to you.
Although the exchange deadline is Wednesday, September 26, most brokerage firms will have a deadline for their clients that is perhaps 2-3 business days or more before that. My broker has a deadline of Friday, September 21st. Also, some firms might want the trade to be settled before shares can be tendered, which takes 2 business days. In other words, don't wait till the last minute to do this. You may be disappointed if you do.
There is much more info on this subject (but for a different stock- CBS) in an old 6-page posting on SeekingAlpha.com. Type "CBS" in the top right corner of the home page. Look for an article dated 10/20/17 by Uncorrelated Returns titled "Entercom: CBS Exchange Offer Creates Arbitrage Opportunity." Scroll down below the article where the comments begin and you will see lots of information posted by this guy named Steve Moore- hey that's me!
Feel free to post questions you have. Good luck to anyone who tries this. I wouldn't stick my neck out on this if I didn't think it had a high probability of being profitable. And, of course, I have no hidden agenda in doing this. It is more of a "paying it forward" type thing for me.
DISCLAIMER: If you absolutely cannot afford to take any risk, don't do this deal. There is always risk in everything you do, even in having cash in the bank (cash, while feeling safe to have, can underperform inflation). That said, even though past performance is not a guarantee, these deals have worked well for me since the first RMT deal I did in 2011.
I'd like to keep this one fairly short and sweet but the process is a bit involved. BOTTOM LINE: If you have a brokerage account with an extra $8,500 or so to invest, I have a way you should be able to make (conservatively) $350 or more in the next month or so. Realistic profit is probably more like $400-1,000+ per person with an approximately 97%+ chance of the deal being profitable. Not a guaranteed profit, but very close to that.
CLIFF NOTES VERSION OF THE PROCESS:
1) Buy up to 99 shares per tax ID of Fortive (FTV) stock.
2) Contact your broker to indicate that you want to tender all of your shares to exchange for Altra Industrial (AIMC) stock.
3) Exchange deadline is 9/26 (W), but your broker's deadline will likely be much earlier- mine (Schwab) is 9/21 (F) at 7pm ET.
4) Approximately 6-8 days after the exchange deadline you will receive approx. 200+ shares of AIMC stock in exchange for your 99 FTV.
5) If possible and profitable, sell your AIMC stock as soon as you see you have it and can sell profitably.
STILL INTERESTED? Here is what you need to do. First you need to have a brokerage account with somebody where you can buy stocks. It doesn't really matter who the account is with, as long as they don't charge sky high commissions. Right now Fidelity and Schwab both have $4.95 online commissions. Plenty of others are under $10. Note that if you have, for instance, a 401(k) account with your employer, you will likely only be able to buy mutual funds and almost certainly will not be able to participate in this transaction.
Realize you are going to pay the regular online commission to buy no more than 99 shares (per tax ID) of FTV (Fortive Corp.) stock- simple enough. There will then be a Reorg fee for your broker to tender your shares, whether you do it online or call a person at the brokerage firm to process your trade. This is different than the online commission as there is more work for the broker to tender the shares. I'm guessing the Reorg fee will be from $25-45 per account- again it varies from broker to broker. There will then be another commission when you sell the stock, so two commissions plus a Reorg fee.
Now the good stuff- Fortive Corp. (Ticker: FTV) is selling part of their business to a another company called Altra Industrial Motion Co. (Ticker: AIMC). If you buy 99 shares of FTV stock and validly tender all the shares, they will be converted into a different number of shares of Altra stock by early-October. You should have approximately 200 or more shares of Altra as it is a cheaper stock than Fortive. The exact number of shares you get is determined by a complicated formula and won't be known till September 24th. As soon as you get the Altra stock, check the value of the stock to make sure you have a fair enough profit and then you can sell the stock right away if you'd like to pocket the profit.
FTV is putting in an 8.7% kicker, meaning they want shareholders who do this to make an approximately 8.7% profit on the deal. The actual percentage that you make will likely be more or less than this amount; in the past the actual profits have tended generally to be somewhat more than the original estimates.
This is what is referred to as a Reverse Morris Trust (RMT) transaction. Don't worry about the term RMT- it is merely a legal provision to enable them to do this without it being taxable to the company. It still could be taxable to YOU as a shareholder, so if you can trade in a retirement (non-taxable) account, all the better.
Important consideration- why not buy more than 99 shares? Because you will likely lose money if you do. At the very least you will be taking on a lot more risk. FTV has a clause which says that beneficial owners of 99 shares or less who tender all of their shares will have all of them taken. If you have 100 or more shares, they will almost certainly take only a small portion (perhaps only 10-15% or less) of the shares and return the rest to you. So you could have a decent profit on 10-15% of your position and likely lose money on the other 85-90%- not a good recipe in my book. Who says wealthy people and hedge funds have all the advantages? Not in this case!!!!!!!
For those who have friends/loved ones with brokerage accounts, you can buy 99 shares in each person's account if you like, validly tender all shares with your broker, and all the shares will be taken. That is, you will NOT be prorated! The brokerage firm you have your account(s) with basically looks at the social security number of the person who owns the account to determine beneficial owner. For a joint account, they look at the person listed first and use their social security number. Parents who have lots of kids can really clean up on deals like this as they can buy up to 99 shares for each kid in the house!
Questions about the 99 share amount:
1. Q: Can you buy less than 99 shares if you don't have enough money to do 99? A: Yes, but please determine in advance that you will still be likely to make a profit. Also, you must tender all your shares. For instance, if you buy 50 shares, you must tender all 50.
2. Q: I have 50 shares in an account that is managed for me. Can I still buy 99 in my self-directed account and tender them? A: If you buy 99 you will be the beneficial owner of 149 shares and almost certainly be prorated and have the vast majority returned to you. Even if you tender only 99 of 149 shares, you will have the majority likely returned to you.
Although the exchange deadline is Wednesday, September 26, most brokerage firms will have a deadline for their clients that is perhaps 2-3 business days or more before that. My broker has a deadline of Friday, September 21st. Also, some firms might want the trade to be settled before shares can be tendered, which takes 2 business days. In other words, don't wait till the last minute to do this. You may be disappointed if you do.
There is much more info on this subject (but for a different stock- CBS) in an old 6-page posting on SeekingAlpha.com. Type "CBS" in the top right corner of the home page. Look for an article dated 10/20/17 by Uncorrelated Returns titled "Entercom: CBS Exchange Offer Creates Arbitrage Opportunity." Scroll down below the article where the comments begin and you will see lots of information posted by this guy named Steve Moore- hey that's me!
Feel free to post questions you have. Good luck to anyone who tries this. I wouldn't stick my neck out on this if I didn't think it had a high probability of being profitable. And, of course, I have no hidden agenda in doing this. It is more of a "paying it forward" type thing for me.
DISCLAIMER: If you absolutely cannot afford to take any risk, don't do this deal. There is always risk in everything you do, even in having cash in the bank (cash, while feeling safe to have, can underperform inflation). That said, even though past performance is not a guarantee, these deals have worked well for me since the first RMT deal I did in 2011.