Stock Opportunity- Make 7-8% Profit in Abt. 1 Month

[Recyclersteve]

You want a quick easy way to almost certainly make an extra $150-175 or more in about a month on an investment of slightly over $2,000? Buy 99 shares of SILA (Sila Realty Trust). Here are more details...

Sila has only been trading about 1-1/2 weeks. They have cash on hand and have decided to spend up to $50 million to buy shares of their new stock. This is what's called a Dutch Auction. You can offer to sell your shares at a price as low as $22.60 per share or as high as $24.00 per share. I always tender at the lowest possible price, in this case $22.60. Let's say that $23.50 is the magic price they end up buying at. In that case, all people who tender shares at prices between $22.60 and $23.50 would have shares taken.

Don't get greedy. If you end up tendering your 99 (or fewer) shares and ask for $23.00 a share and they end up paying the $22.60 minimum, guess what- you would have all your shares returned to you and could potentially end up LOSING MONEY ON THE DEAL. So please don't get greedy and blame me when your shares are returned to you. That clearly wouldn't be fair.

Now, here is the kicker- and a clever way around it. They are only offering to buy approximately 4% of their shares, not all of them. I don't expect everyone to tender all of their shares as there are some who would rather just hold onto what they have. If the company is buying 4% of all outstanding shares, I'd expect that a person with, say, 1,000 shares, would likely have between 6% and 8% of their shares taken. The other 92-94% of shares would be returned to the shareholder.

BUT, HERE IS THE INTERESTING PART. There is an odd lot clause for those who have 99 or fewer shares per tax ID number (not per account). In other words, the person above who has 1,000 shares should expect to have only 6-8% of their shares taken. The person who has 99 shares (or fewer) of Sila and validly tenders all of them (you can't buy 99 and tender 98- you must tender all 99) can expect with virtual certainty that 100% of their shares will be taken. I've done a bunch of these over the years (the first was Home Depot in 2007) and my wife, daughter and I have all made many thousands of dollars doing these tender offers. In fact, my late 20's age daughter says "Dad, you don't have to even tell me about all the tender offers. Just do them for me because we've done so well in the past." Any other stock I need to discuss with her before buying it.

Where is the stock right now? Monday the stock closed at $20.70. If you bought at that price and got $22.60 per share for them (the minimum), your profit would be a very nice 9.2% in about one month. That is in line with the average return for the stock market OVER AN ENTIRE YEAR! I'd pay up to $21.25-21.50ish for the shares if I had to. I don't recommend waiting until we get closer to the deadline. As more and more people become aware of this deal (perhaps via posts like this very one), I expect the price of the stock to likely move up a bit and maybe so much that it just isn't worth doing the deal at all.

When is the deadline? Although the official deadline to tender your shares is Friday, July 19, 2024, your broker will almost certainly have an internal deadline that applies to you and it would likely be perhaps 1-3 days before the official deadline. Schwab's deadline is Wednesday the 17th, but I don't remember the exact time that day.

How much does this cost? I can't speak for all companies, but at many firms it should cost zero to both buy and tender the shares. If you are unable to figure out how to tender the shares online, your broker will likely have a department which handles this sort of thing (at Schwab it is the Reorganization dept.).

What are the chances that this backfires for some reason? Fair question. I'd guesstimate that there is about a 1-2% chance that they either change the terms of the tender offer or withdraw it altogether. This is a newly public company, so I'd imagine that it would be very embarrassing to them if they did this. I remember one in 2018 by school bus manufacturer Blue Bird (Ticker: BLBD) where the company initially offered to give priority to odd lots. They then came out and said EVERYONE would be prorated. This is the only one I know of that pulled such a stunt. I still made a small profit, but had to hold onto the stock for a good while to do so. That said, I'm willing to bet on something with a likely 98-99% chance of good success.

What is a way to do this with a lot more money and make a lot more money? I don't know of any way to do that involving actual skill, since the small shareholder has an absolutely huge advantage over the big money people. So if you don't want to make $150-175+ on a deal like this, you will need to wait until the next one comes up. The last one that was low risk with a better chance of making $4,000-5,000 for 99 shares was the Cummins (CMI) deal with Atmus Filtration (ATMU) which I wrote about quite a bit in February-March. That was because you were buying 99 shares of a roughly $260 stock instead of a $20-21 stock.

If you are new to the stock market or young or never have done a corporate action before, they don't come up that often. There are usually only perhaps 2-3 per year or so that are worth talking about. If this isn't one of the easiest ways to make a very solid profit without taking a lot of risk, then I honestly don't know what it takes. Any questions, please ask below or call your broker.

[natsb88]

Tried to preview a buy order on Firstrade and got the error message "Opening Trades Not Accepted Due to Illiquid Volume"

[Recyclersteve]

Tried to preview a buy order on Firstrade and got the error message "Opening Trades Not Accepted Due to Illiquid Volume"

Call your broker. Maybe you put in the wrong symbol?

The illiquidity doesn’t make any sense. This traded well over 1 million shares on Tuesday.

[natsb88]

Tried to preview a buy order on Firstrade and got the error message "Opening Trades Not Accepted Due to Illiquid Volume"

Call your broker. Maybe you put in the wrong symbol?

The illiquidity doesn’t make any sense. This traded well over 1 million shares on Tuesday.

Symbol was correct. I'll check on it tomorrow. If it's not resolved I'll send them a message to see what's up.

[silverflake]

OK Steve, I'm in! Got 99 at 20.74, called Schwab and had them tendered at 22.60. Now I wait. Will keep you posted.

[natsb88]

Tried to preview a buy order on Firstrade and got the error message "Opening Trades Not Accepted Due to Illiquid Volume"

Call your broker. Maybe you put in the wrong symbol?

The illiquidity doesn’t make any sense. This traded well over 1 million shares on Tuesday.

Symbol was correct. I'll check on it tomorrow. If it's not resolved I'll send them a message to see what's up.

Update from Firstrade:

Based on the average trading volume for the symbol SILA, it is currently considered to have low/illiquid trading volume. We are not allowing opening of new positions at this time.

[thecrazyone]

Thank you for being kind and sharing that info!

[Recyclersteve]

Based on the average trading volume for the symbol SILA, it is currently considered to have low/illiquid trading volume. We are not allowing opening of new positions at this time.

[/quote]

Any brokerage firm of decent size would have no issues whatsoever with you trading this stock. I’d consider opening an account with Schwab, ETrade, Fidelity, Vanguard, etc. Just make sure the brokerage firm doesn’t charge commissions for stock trades. Sorry you will likely miss out on this one.

[silverflake]

Steve, thank you! The SILA deal went through smoothly for a ~9% return in less than a month.

Keep 'em coming!

And keep stacking.

[Chaboo]

Thank you for letting us know about this one!

[Recyclersteve]

Thanks guys!

Depending on when you bought the stock, you may have also received a modest dividend. My dividend was a little over $13 for 99 shares of stock.