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Updates on TPCA and GYRO

June 24, 2017

A quick update on a couple of positions that are in the news.

Carl Icahn’s IEP and Tropicana Entertainment (TPCA) are offering to purchase up to 5.58 million shares of TPCA shares in a Dutch auction for a minimum of $38 and maximum of $45 per share with the tender running through August 2nd. The auction is contingent on at least 2 million shares being tendered. If the full 5.58 million shares are tendered IEP will control over 90% of the outstanding shares as it already owns 72.5%. My only thought about this tender is that the price range is rather odd since the stock is already trading at $42/share; why anyone would tender below the current market price is not clear to me. In any case, I will be tendering my shares at $45 since my original investment thesis was that Icahn would do something to bring the share price closer to HIS estimate of intrinsic value ($48/share per IEP’s balance sheet valuations), and here we are. A 45% gain in less than 6 months is nothing to be sneezed at. On the other hand, I also don’t mind if he doesn’t buy up my shares at $45 as I’m quite convinced he would come back at a later date with a potentially sweetened offer.

Gyro dyne Corp. (GYRO) has announced a distribution of $1.00 per share as part of  their long-term liquidation process. My thought here is that after the shellacking common shareholders (me, primarily!) took in the exchange a year and a half ago I’m a little peeved that the liquidation isn’t being moved along with a bit more urgency. I look at the slowness of the process and note that, as usual, management is reticent to liquidate in a timely manner since their compensation terminates with the full wind-down of the company.

On a similar note I’m also becoming less and less enthused with Winthrop management’s handling of their liquidation; its been almost a year now since the company’s remaining assets were put in a liquidating trust and we shareholders have seen little in the way of property sales and liquidating distributions. I was very positive about management when they first decided to put the REIT into liquidation almost 3 years ago but now I’m beginning to wonder if they are not just dragging out the liquidation process for their own benefit. Because of what’s happening with the Winthrop Liquidating Trust I’m beginning to get worried about my position in New York REIT (NYRT) as Winthrop’s management has taken over management of that liquidation as well. As part of Winthrop management’s pitch to replace the then-current management at NYRT they estimated the liquidating value of NYRT at over $11.00 per share. But the latest financials for the company, the first to be presented under liquidation accounting, show a liquidation value of just $9.25 per share. So where did that $1.75+ per share of value go? Difference between conservative liquidation value and real potential liquidating dividends? or perhaps difference between marketing (when you’re pitching something that will bring in $) and operations (when you actually have to perform!)….hmmmm. We’ll see. Maybe I’m just being a bit too anxious.

Just a note on my cash position. From the above you can see that I have invested in a number of situations that are self liquidating. My current portfolio remains about 50% equity, 50% cash, and with time (and no action on my part) I’m looking for the cash portion to increase. (Note that I wouldn’t mind if the equity portion increased too.. in both absolute and relative terms!) Yes, I’m nominally in the camp of ‘overvalued stock market’ but I have no idea when or even if this might be corrected. Unlike most market analysts, I’m willing to freely admit I have absolutely no predictive powers. My cash position is more reflective of the fact that I can’t find anything dirt cheap to buy (and that what I do buy doesn’t turn out to be as dirt cheap as I thought … but that’s the subject of my next post). I have to fight daily from keeping that cash from burning a hole in my pocket, especially since I’ve been wrong on the market direction for a couple of years. But better safe than sorry; I’m too old to go back to waiting on tables or being a Wal-mart greeter (ouch!) Selling apples on the corner (1930) no longer seems to be an option!

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