There’s an odd-lot provision in there, but it looks like they’re going to drill into your ownership stake to see whether or not you get prorated, if proration occurs. Just tendering 99 shares of your existing JNJ investment will not be enough to force the exchange at 99 shares…
(see p. 92 in Prospectus, paragraph 2 of “Odd-Lots”.)
Any opinion about how good or bad a deal this is for JNJ holders?
Murph, I haven’t looked at the individual companies. I’m looking just at the built-in discount that they offer on the exchange.
From what I read, you’re likely good if you have 99 shares or fewer and tender them all. The people who won’t get even their odd lot filled are those who have more than 99 shares and those who don’t tender their full holdings, even if it’s less than 99 shares.
So if your only holding is 99 shares and you tender them all, then you’re highly, highly likely to get them all taken.
I have reloaded the link above from time to time and I don’t see it populated with conversion ratio, etc. Am I missing something?
Vince, yeah, it’s frustrating how they set that up. Use this link and compare to the one you’re using and you’ll spot the difference (the date). They change the date every day, so you’ll need to keep updating the URL.
Given that KVUE fell by a bigger % than JNJ today, the first day of the averaging period, the upper limit was reached and breached - but barely on the rolling 3 day basis. Let’s see what transpires tomorrow.
Yep, we’ll see what happens in the next couple days. I need to lock in my position still.
E*Trade is allowing changes up until Thursday PM, so that is a nice window. I elected to exchange my odd lot, but have time to back out.
This is advanced topics for me so check my thinking please. It looks like the 8:1 ratio is going to hold or close to it. To protect that arb gain on the odd lot exchange, should one short 800 shares of KVUE, assuming a 99 share odd lot of JNJ? If KVUE falls, the short profits offset the loss and if KVU rises, the stock’s gain pays for the additional dollars to buy back the stock.
Yeah, once we know the exchange for certain then you can know exactly how many shares to offset with a short sale and lock in a profit today. I was finding no immediate shares available for borrow at IB yesterday, but maybe some shares are out there today. When you receive the KVUE shares from the exchange in the account, they’ll simply offset the short position.
Also, be sure that you do not own in aggregate more than 99 shares (in this account or others), because you’ll need to tender your full holdings (and not more than 99 shares) to get the oddlot priority. Otherwise, you’ll be prorated, with estimates at just 30% of holdings being accepted.
My calculations say we get 797 shares of KVUE for 99 shares of JNJ.
I had some shares in an IRA and I guess that is ‘beneficial ownership’ so I will unload them.
The exchange takes place on Monday - so when should we short?
Any time you want to lock in the given spread. I’m still not seeing shares available to short at IB.
They were available at ETrade today.
I have looked to see when the exchange will actually take place without success.
Lots of moving parts here. I had sold my JNJ shares in my IRA at prices above 172 in case they qualified as beneficially owned shares. Over the weekend, I wondered if i should have bought a call to capture any upside in those shares, since I wanted to buy them back later. I successfully shorted the KVUE at 23 and change and those shorts were profitable last Friday. The indicative gain on exchange was down to 5.5%…
Then it all changed today as JNJ shares fell and KVUE rose. Some suggest that many folks were Buying JNJ last week and shorting KVUE to take advantage of the odd lot guaranteed exchange and that led to today’s movement on both stocks. Anyway, I might be able to hit the daily double and buy back JNJ at a lower price to replace my beneficial shares and l already locked in the 7.5% gain for the exchange.
As always, thanks, Jim!