Free lottery ticket available (SST)Monty,
RE: arbitrage
I don't care much about the fact that Silverstone is currently trading at 4 cents (roughly 2%) below where it should be at exactly .185 of the price of SLW. What excites me is the strong possibility that someone like Franco Nevada will do the analysis and see that at a higher price, Silverstone is still a bargain. If so, another bid for Silverstone will lift the stock price substantially. A present Wheaton shareholder has nothing to lose by selling Wheaton and buying Silverstone. If nobody else bids for Silverstone, he ends up with Wheaton shares. If someone else bids, he ends up with a higher price. If Wheaton changes its offer (and wins the battle) in response, he ends up with more Wheaton shares than he sold before. Selling Wheaton and buying Silverstone is a no-lose proposition if you already own Wheaton shares. It's a free lottery ticket.
But, the possibility of a new bidder is obviously also a free lottery ticket for Silverstone shareholders. In this regard the point I want to make to everyone is that the possibility of a new bidder is a strong reason not to sell any Silverstone shares. You don't think another bidder is likely? Several weeks ago I raised the possibility that sudden heavy trading volume in Silverstone suggested that a bid was coming, and nobody believed me then. I am doing the math, and asking myself, if I was Franco Nevada, what would I do. My conclusion is that if I was Franco Nevada I would jump all over Silverstone with an offer over $2.00 ($2.50 perhaps, for starters, in cash or shares?). It's the logical thing to do. They may not do the logical thing, but I am expecting that it's in the enlightened self interest of Franco to make an offer, and that's good for us Silverstone shareholders.
tooclassy