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11:02 am
March 3, 2012
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somrh
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Could be. I think the ZH joke is simply that Goldman does the opposite of what Goldman says.
On that note, the coffee company may turn out to be an interesting opportunity. If there is selling post-spin it might turn out to be an interesting play.
I still have calls on SLE but if I double my money on this I may cut my position in half (effectively getting my position for free).
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7:09 am
March 3, 2012
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Jae Jun
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or maybe GS is lucky that Mario Gabelli was on their side?
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11:51 am
March 2, 2012
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somrh
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| Member | posts 336 |
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Well, Goldman got one right. Those $.15 call options are now worth $1: a one day 6 bagger. SLE just hit $22.
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12:24 pm
March 1, 2012
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somrh
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Sounds good to me. Jae, you want to put this together? 
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11:48 am
March 1, 2012
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Graeme
| | Austin, Texas | |
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We need a "do the opposite of Goldman's suggestions" backtest screener to see how it plays out
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10:54 am
March 1, 2012
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somrh
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| Member | posts 336 |
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1 bullish and 1 bearish news bit for SLE:
Sara Lee to float coffee business in Amsterdam
Sara Lee's coffee & tea unit to IPO in Amsterdam-report
So there's some expectation that there will be dumping of the coffee company (partly due to it trading in Amsterdam… Will that mean it's not trading in the US?). The company announcement is suposed to come today or tomorrow so I supose this is just rumor.
Goldman Sachs Suggests Buying Calls on Sara Lee
Maybe I read too many ZeroHedge articles but that tells me I should be selling my call options.
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1:52 pm
December 20, 2011
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somrh
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| Member | posts 336 |
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They must be Old Coffee Company.
I have Jan 13's. I'm banking on the spin-off occuring in the first half of 2012 and that gives me 6 months for something interesting to happen. If nothing happens then I'm out.
Each contract entitles me to 100 shares of SLE. If the spinoff occurs then I get the right to buy the equivalent of what a shareholder holding 100 shares would get.
The strike price will also be adjusted for the $3 dividend (the stock will probably tank by $3 post dividend.)
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12:26 pm
December 20, 2011
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Graeme
| | Austin, Texas | |
| Member | posts 183 |
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somrh said:
So SLE purchased CoffeeCompany. (I wonder who came up with the name of that business?)
Graeme said:
Like, if you had 10 shares of SLE and it splits into SLE and NCC (New Coffee Company), do you get 5 and 5?
They are obviously forum readers, but didn't like the "New" part.
When do your calls expire? What happens to your contracts if it splits before they expire?
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10:59 am
December 20, 2011
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somrh
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| Member | posts 336 |
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So SLE purchased CoffeeCompany. (I wonder who came up with the name of that business?)
Would this indicate that SLE has intentions of treating their coffee company as a going concern and not a buyout candidate? If so that would only leave the meat company on the table for buyout.
I ended up picking up calls on this one. I'm not entirely comfortable with the valution so I'm considering it speculative. The downside is I miss out on dividends but there's plenty of upside if this works out.
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11:26 am
December 2, 2011
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somrh
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Mario Gabelli thinks this is a good play: See here.
In particular, he thinks coffee is a good play and that SLE is a good opportunity there. He also thinks that there is acquisition potential there. He values SLE at $23.
It's now currently trading at $19. I don't think I'd consider getting in at this price level. I'm guessing the price will go back down once the irrational exuberance over the Fed's commitment to loan money to Europe at a half percent discount wanes. (How is that supposed to really address the Greek debt issue along with the bank capitalization issue? Let's ignore the sovereign debts of Spain, Italy and Portugal. The big question in my mind is whether or not there will even be a euro in 5 years.)
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6:43 am
November 28, 2011
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somrh
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Off the top of my head, I believe it would be 10 shares of coffee and 10 shares of Sara Lee. But I can't find the reference for that at the moment so I'm not sure where that's coming from (my ass maybe?).
Anyway, the only thing I'm liking right now is the $3 dividend and the quarterly dividend. I'm not sure if I like the company much.
Since both companies will have about the same revenues, they will probably sell around the same price so I'm not sure if there will be any forced selling. If I'm right about the above, then the shares get dropped to, say, about $15 and post split they sell for $7-8. That price probably isn't low enough to cause much selling.
The only potential catalyst (and I'm not sure if this is even on the table) is if they're doing this in order to get a takeover offer for one or both companies. That would, at least, make it interesting.
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8:37 pm
November 27, 2011
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Graeme
| | Austin, Texas | |
| Member | posts 183 |
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If you buy pre-split, when it does split do you get shares in both companies? Like, if you had 10 shares of SLE and it splits into SLE and NCC (New Coffee Company), do you get 5 and 5?
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5:27 pm
November 26, 2011
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somrh
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| Member | posts 336 |
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Sara Lee is planning to divide up the company. See here.
Quick summary:
Form 2 new companies: Sara Lee (processed meets) and a coffee company.
Net Sales will be about the same for both companies ($4.2B for Sara Lee and $4.85B for Coffee).
Both companies will pay dividend "together no less than what Sara Lee has been paying prior".
Both companies will have invetment grade status.
They plan to pay a $3 special dividend in 2012 as a result of selling some assets (H&BC and N.A. Fresh Bakery)
SLE currently sells at $17.74 per share and pays a 2.6% dividend yield. I'm wondering if this might be a good opportunity to buy pre split.
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