Year-End Spinoff and Merger Updates

Money manager Adrian Day comments on Yamana Gold’s spinoff purchase rights and the American Capital/Ares Capital merger.

Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) purchase rights have now ceased trading. Although some shareholders may have been able to salvage a few dollars from selling these—depending on how many shares of Yamana you owned—given the “difficulty” some custodians seemed to have had in getting the rights into a saleable form, as the price fell from 33 cents to under a penny, we won’t attribute any value to these, and thus leave our cost basis for Yamana unchanged.

Shareholders of both American Capital Ltd. (ACAS:NASDAQ) and Ares Capital Corp. (ARCC:NASDAQ, 16.16) approved the long-awaited merger, expected now to close in January. Though there may be some volatility around Ares, the surviving entity, we are strong holders, and will look for an opportunity to add to positions, should it present itself. The strong short position in Ares—not unusual in an acquiring company—suggests the stock could be strong after the merger.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: American Capital, …read more

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