Showing posts from October, 2018

Purchase: WesternOne (TSX: WEQ)

WesternOne (TSX: WEQ) is being liquidated and it seems like an attractive investment so I took a position in it. I came across the idea from Sculpin at Corner of Berkshire and Fairfax (thanks). You can read the official press release but basically they are winding up operations and expect to pay out $2.20 to $2.43. It will be adjusted up or down by working capital but hopefully no negative surprises emerge. Initial distribution in Q1 2019 with another one upon liquidation. A shareholder vote is required but about 38% is held by insiders who approve the deal. So I think risk is low. The return is going to be driven by how much is paid out early. I'm hoping most of it will be paid out by end of Q1 2019. Purchase price (TSX: WEQ): $2.10 Return Expectation Liquidation price (conservative, low): $2.20 Return: 4.8%

Purchase: Nevsun (NSU)

I took a position in Nevsun (TSX: NSU) which is being bought out by Zijin Mining, which is one of the largest gold mining companies in the world. zijin is a chinese company that trades in Hong kong and there should be no risk with financing and the like. I owned Nevsun about 10 years ago and this buyout would bring closure to one of my earliest stocks. Since the spread is so small, this deal is not worth it for you if your holdings are in a different currency and you don't hedge; or have a US$-denominated account. C$ currency fluctuations can wipe out any gains. NSU also trades in USA but company is Canadian and all my dealings are in C$ and on TSX. Purchase price (TSX: NSU): $5.72 Return Expectation Takeover price: $6 Purchase price: $5.72 Probability of success (my estimate): 99% Return on success: 5% Probability of failure (my estimate): 1% Return on failure (my estimate): -56% (assume it drops to $2.50, the multi-year low from early 2018 (it has traded between $