Shailesh Kumar | Apr 04, 2013 12:38AM ET
As you probably know, American Greetings (AM) is going private. A group of the founding family members (Weiss) have offered $18.20/share and the board has accepted the offer. The deal is expected to close in Jul 2013. I recommended and bought the stock first in Dec 2011. Over the last 15 months, I have added to my initial purchase a few times and as the Weiss family made the first offer to take the company private, I advised my members to continue to hold the stock.
The following is the chronology (links lead to the exclusive premium content that I am now making public):
My average cost across the 3 purchases was $13.82/share, after adjusting for the commissions paid.
Come July, the stock will cease to exist. However, there is still an opportunity to buy the shares today and collect a dividend of $0.15/share, giving you a pretty much risk-free ~1% return in 3 months. If you have money parked in a CD or a money market account, this is a much better deal with very little risk. There is also a possibility of some capital appreciation.
The company is selling at less than its intrinsic value so long term shareholders are right to feel aggrieved. However, for me this is especially good timing to shore up my cash position as with the latest purchase in March we were down to 5% cash in the portfolio.
Besides, it is often wise to just take your gains and move on.
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