Q: Hello 5i team,
You entered a position for NBLY of ~$34 in the growth portfolio. Since there was a tentative offer to go private of $20.50, what is the rationale to stay? Is it in anticipation that the offer would not go through and continue to hold going forward into the future?
It seems that there is no reason for this stock to ever go past $20.50 until this is finalized, or am I missing something here.
Thank You,
Andrew
You entered a position for NBLY of ~$34 in the growth portfolio. Since there was a tentative offer to go private of $20.50, what is the rationale to stay? Is it in anticipation that the offer would not go through and continue to hold going forward into the future?
It seems that there is no reason for this stock to ever go past $20.50 until this is finalized, or am I missing something here.
Thank You,
Andrew
5i Research Answer:
The upside is indeed likely capped at $20.50, as we would not expect a higher offer. But, we view it as a decent arbitrage holding, with potential gain from current levels of ~16%, which (if the deal closes in the 1Q of 2024) would be well in excess of 35% on an annualized basis.