THOUGHTS about EQU Although I m long EQU for months now, these are my concerns for EQU case
1) The Company stays in a status quo without any deal....The mgmt also say that the offers were not satisfactory so they plan to grow the Company organically....As the insiders do not have any skin in the game, a proxy fight starts and it takes some months....The pps plummets shortly after the announcement that no offer was considered satisfactory.....
2) EQU sells part of the Company either the US or the Canadian assets....The question here
is HOW will the market react ? Will it like the deal ? Won't the market like the deal and it will dump the shares eventually ?
ASSUMING the market reacts positively (10-20-30% ?), where will the starting price be once the deal is announced ?
If S&P corrects much and If EQU corrects too as it has already risen 50% from its recent lows at 2,5 $, we may see a 20% rise from 3 $ once the partial asset sale is announced.....so the pps will hit 3,60 $ which is lower than the current pps.
Timing matters a lot in this (2) option as EQU has already risen more than 50%.
3) EQU sells itself as a whole entity.....However this is highly unlikely for several reasons....
The first reason is that it has both US and Canadian assets so both assets do not fit to any Company......US assets are for the income investors and the Canadian are for the growth investors.Nawar has already analyzed this case and its low odds very well.
The second reason is that the current incompetent and ineffective mgmt team will have to find an other job in a crisis environment..... Who is willing to start again from zero in the age of 55 y.o. ? They definitely want to stay in EQU and keep getting their salaries until they get their retirement as they are already old.
So the (3) option is not likely.