• theretailsedge

Cumulus Media: Tender Offer

Hi Friends,


It has been sometime since I recently wrote an article here. Unfortunately, like many people in the market, I've been getting my ass handed to me in this volatile market. The recent struggles I've had has forced me to re-evaluate my typical portfolio construction and rethink my approach to position sizing and macro events. My hope for the next few months is to move my money into one account (for some reason I have 3-4 brokerage accounts open) and provide radical transparency in the trades I perform. My blog posts will be super short and more regular, so stay tuned.


As for this post, I wanted to share a small opportunity I'm invested in - CMLS


Cumulus is a media/radio company that recently rejected a bid in the $15 - $17 range stating they believe the offer wasn't in the best interest of shareholders. However, in tandem with the rejection, the company announced a dedication to returning cash to shareholders. As part of that effort, they announced a tender offer for between 8% - 10% of the shares outstanding with an odd lot provision.


For those that don't know, an odd lot provision states that they will buy back shares from investors that tender for less than 100 shares. The tender offer currently stands at a price between $14.50 - $16.50, while the stock is trading at $12.75.


I recommend (not financial advice!!) to buy 99 shares of CMLS at $12.75, wait about 2 weeks to see where the stock trades for, and then, if the stock isn't materially higher, tender your shares for $14.50 by clicking a few buttons on your account. At today's price, you'll make about $173.25 on a $1,262.25 investment - about a 13.7% return in a month. I've purchases a good chunk of shares in the $13.50 - $14.50 range in hopes that the stock will drift higher due to the tender participation. However, this market selloff has not been kind to me so jury is still out.


Happy Investing,

Josh


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