http://www.marketwatch.com/news/story/activist-hedge-fund-returns-wane-their/story.aspx?guid=%7B8BB93ED9-82C1-4D6F-A016-36F1971C46A1%7D

Seems that the acquiring company usually loses value during a merger, to go up later after the acquisition realizes better business. So I’m just assuming that HSSO went down, as the acquirer, and now that its not taking on that responsibility, it’s gone up. I don’t think anything is fishy there.

I rang EMAG but they didn’t pick up. What’s also interesting is that HSSO is up 40%. Up just as much as EMAG is down.

I did not ask Gus anything other than my main interest: Are you still in? Knowing he’s got board seats I realized he couldn’t/wouldn’t speak confidentially anything with me. We commiserated a bit about how disappointing this was. When I asked him if they had sold he exclaimed “We CAN’T sell!” so I got the sense that he wished he could’ve. Which could mean his frustration is prior to this morning, that maybe he knew somethings about the deal which prevented him from selling. His comments on it falling through indicated disappointment with SIBL but acknowledged the strange and unfamiliar environment that all are in. He did say they now move on to Plan B. I did not ask if B included SIBL, or not. I did not ask if there was also a Plan C. I left him with my name/phone/email if there was anything I could do in coordination with his Oliver Press Partners trying to get this company to make better shareholder value.

Then we went over a bit about how it iS a good business idea that has yet to make as good a business as it could be with good shareholder value in as vague and polite of words as possible.

@ Jim
The market sure takes people for a ride.

@ John
Until SIBL changes their mind or EMAG pursues other action, I have to consider the deal dead. I haven’t found anything else and although the language is unclear, no point in hoping I guess. I’ll have to monitor what happens in the next few days and find an exit.

@ Ken
I read through their website and I couldn’t find any real warning signs. Sure their returns may be too consistent but I don’t think that had to do with the deal. There must be something else going on that we don’t know about.

@ All
Depending on what transpires over the next couple of days, I’ll probably be taking a huge 50% loss. The risk in risk arbitrage played out and I should have taken the chips off the table when something smelt fishy yesterday.

Ken’s last blog post..WSC Dividend Increase

Jae
I noticed on your twitter post that SIBL backed out. Did you find any more information other than Emag’s initial press release or are you speculating that they have backed out entirely? The only news I have found this morning is the release saying that SIbl is not expected to provide funding for the merger to close today. (which PROBABLY means they have backed out)

They are entitled to 9m. They do have a valuable service. However they have not been too very good at the business of making money with their service. I had the misfortune of not being able to sell at any reasonable loss this morning so now I am looking at a HUGE one. Not much to do now. The decision to hold it (—–) or sell at this terrible loss is not going to be that much different right now, or a few hours from now.

I do think someone else will want them. I don’t know if I am prepared to wait for that to take place. I do not think without a merger or a change in the board that they will be much better at making money than they have been.