CMI split-off offer

At IBKR, it is showing I will receive 1190.9502 and I have shorted 1191 ATMU shares. Do we know whether we will get rounded to 1191, if so, what is the price for buying the fraction? or what is the price for .9502?

From the ATMU S-4:

Will I receive any fractional shares of Atmus Common Stock in the Exchange Offer?

No. Fractional shares of Atmus Common Stock will not be distributed in the Exchange Offer. Instead, you will receive cash in lieu of a fractional share. The exchange agent, acting as agent for the Cummins shareholders otherwise entitled to receive a fractional share of Atmus Common Stock, will aggregate all fractional shares that would otherwise have been required to be distributed and cause them to be sold in the open market for the accounts of those shareholders. Any proceeds that the exchange agent realizes from the sale will be distributed, less any brokerage commissions or other fees, to each shareholder entitled thereto in accordance with such shareholder’s proportional interest in the aggregate number of shares sold. The distribution of fractional share proceeds may take longer than the distribution of shares of Atmus Common Stock. As a result, shareholders may not receive fractional share proceeds at the same time they receive shares of Atmus Common Stock.

https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1921963/000110465924022978/atmu-20231231xs4.htm

Jim

Thanks Jim! Now I have to buy back 1 share on both accounts!!

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Talk about good process, bad outcome! ATMU is rocketing - over 26 this morning.

It is not a bad outcome. You entered into the hedge so that you know the outcome is defined. So, what the share price now doing is irrelevant. Of course, if we didn’t short ATMU then you could have made $4k :slight_smile:

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OK - worse outcome, but not bad. methinks you dost split hairs here.

The borrow is killing. I need to find a way to deal with this on Monday.

Agree that the hard to borrow rate is ridiculous. Punitive. So much so that I am going to call them and complain. I will have no problem leaving them after many years if this kind of usury is their preference.

I was wondering - maybe buying puts is the answer? I’m guessing that would have been discussed by the bright people here if it were feasible - I can see that they may be clunky to match the timing of the deal and the cost - well, maybe cost wise it would work out given the E*Trade usury.

Vince

I considered that, but the borrow is used to so cheap, and looking at overall profits, I didn’t bother. If you see what I posted, I was also short United Health and you can see the daily borrow is like $0.6. I took a quick look at the option premium is some what elevated. I will wait for the market to open and come up with an idea. In any case, you should go little further like April settlement and go little higher like $30 so that the premium is completed eliminated.

PS: Separately, After almost 20 years with E*Trade, I am ready to move-on. Ever since MS bought them the service is bad, but for me the worst thing is they are paying nothing on the money in your brokerage account. 5% vs nothing is a big difference.

I opened a premium savings account or some such for that very reason. It pays a MM yield - the kicker is only 5 WDs allowed per month. But I’m with you, I see no reason to hang on to E*Trade when there are better options.

Vince

I guess this is the one you opened at MS bank. I am used to the flexibility of online banking and automatic sweep means you have margin availability etc. Now, with the money actually withdrawn from your account is making it difficult. E*Trade is a discount brokerage, and when a full service broker like MS bought it, they are trying to upgrade you by making life painful at discount brokerage.

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King,
I found my borrow over $100 today. I wonder if others - non-ETrade folks are seeing the same thing. ETrade told me that they are confident that their 38% is competitive. I told them I am going to check it out because I will leave if it isn’t. They didn’t seem worried. Would love to hear what others are seeing.
Vince

IBKR borrow is over 50%. So I bought 1000 shares and closed and sold Apr 25 calls. I can do naked call sales in IBKR, so I could do that. The option spreads are so wide it is not going to be possible to have an effective option strategy now. In future consider options to hedge rather than shorting.

Live and learn.

King,
Could you provide it in slow motion - if 99 CMI yields 1190 ATMU. We need 12 contracts. So is it as easy as selling 12 April 25 ATMU options? If the stock falls, you have the option premium and the intrinsic value as a hedge until the price falls below 25 less the IV received. If it goes up or stays above 25, the shares you receive in the spinoff get called away.

Thanks,
Vince

Yes. I sold 10 contracts and bought 1000 shares and left 190 shares short.

I went even further April monthly expiration, semantics.

That’s a possibility. I have to take that risk and deal with it. Because paying $70 a day means all profits will be wiped off. You are trading one type of risk with another. I could have bought a $25 Put and basically locked it, but took the risk. I was flirting with that idea.

You are not going to completely eliminate the risk or at least that boat has sailed. The best way to deal in future is not to short but to buy puts, that way we have clearly well defined profit.

Today at IBKR they are showing credit for ATMU shares. So all I managed to do is avoid one day borrow and traded it for covered call risk :slight_smile:

ATMU shares showed up today for me as well, closing out the short position. A week from purchase to close, not too bad.

Jim

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E*Trade makes you call to close the box position, which seems like a way to charge more interest on shorted stocks. I’ll explore that one later, but it left the hard to borrow list for the final day and total interest charged was less than $200, which did not sour the deal much at all.
Vince

Same with E*trade. I submitted a ticket, but still they want me to call and you have to spend like 15 minutes. Frustrating. In the past I have closed boxes, and certain other adjustments to the portfolio by submitting online tickets.

Sorry - I meant E*Trade. Duh. More reasons not to like that bunch.