Monday, August 15, 2016 0 comments ++[ CLICK TO COMMENT ]++

Sold/Final Liquidation: Comdisco (CDCO and CDCOR)

I haven't done any investing in the last few years. In addition to being busy with some personal life stuff, I have felt the market is overvalued. In any case, one of my last special situations, a liquidation, I invested in 2009 finally made its final liquidation distribution.

Given the huge bull market over the last 6 years, this investment severely underperformed. However, I am ok with the outcome given how I was bearish and wanted something uncorrelated with the market.

One lesson to be learned from this investment is that liquidations can take much longer than one expects. I anticipated further delays when I made the investment but I never imagined it would last this long. It took approximately 7.5 years from when I invested (I was expecting it to close out within 3 to 4 years).

Comdisco (formerly CDCO -- security cancelled)
Purchase price (approx): US$ 7.00
Final distribution: US$ 4.564
Distributions: $3.1273, $2.3455
Total return (US$, worst case estimate*): 37.8% (4.37% annualized)

Comdisco Contingent Distribution Warrants (formerly CDCOR -- security cancelled)
Purchase price (approx): US$ 0.115
Final distribution: US$ 0.077
Distributions: $0.04985, $0.03739
Total return (US$, worst case estimate*): 51.7% (5.71% annualized)

(*worst case based on simple assumption that all distributions received at end. In practice, distributions were received in earlier years, 2011 and 2015, so the annualized return is actually a bit higher than what is shown.)

Another liquidation I have been recently looking at is Motors Liquidation Trust (OTC Pink: MTLQU). This is the former General Motors (GM) that went bankrupt (aka "bad GM" or "old GM"). It is a trust that is involved in litigation and makes distributions based on court case resolution. I haven't pulled the trigger yet and need to do more homework for a couple of reasons. I am not sure if there are adverse tax implications for Canadians who invest in this. The case is complicated and it's hard for me to tell if this is just a straight liquidation like others (such as Comdisco above). Furthermore, MTLQU has been selling off over the last few months and I can't figure out why. Not sure if it is because the market is hitting records and no one wants to be stuck owning this; or if it is due to recent negative developments with ignition key lawsuits GM is facing; or is it something else?

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