Sir Royalty Income Fund T.SRV.UN

RE:Confession Time...

[BobTheKnob2]

I see that Janes has taken up the shares that were tendered and issued a press release not long ago.

After reading it, I have this feeling that we are not done yet. You might want to put on your bib, a food fight might be on the menu.

BlueJay2020 wrote: I tendered a good chunk of my shares today, and what I have left at the moment is basically playing with house money. Having said that, it's purely a defensive play at this point, and here's my thinking:

I don't see a short-term catalyst for the share price going above $5. I am betting that Janes will be successful in getting their 10%, or close to it - if so, they will be up to their 20% threshold and not in the market for more.  (There is a small possibility that they will make an other offer to hoover up a few more shares, if needed, but I cannot see then going above $5.25.)

Sir Corp are already out.  That leaves a possible third bidder to come in.  As 40% of the shares will be closely held by committed investors, I am not sure there's room for a third bid.  It's just not a big enough opportunity for many players.

If it came in, it would probably be in the $6 range, at a guess.  But if one didn't come in when the stock was $3 or $3.5, it seems hard to see why one would emerge now.  (Sir Corp think it won't).

Beyond that, it's down to the share price moving up by itself as Ontario gets back to normal, with the key catalyst being the restarting of distributions.   I think Sir Corp are right that this won't happen in the medium term - and we don't yet know how quick and how smoothly things will get back to normal - firstly in terms of vaccine roll-out, and secondly in terms of customers flocking back.  So I don't see a lot of upside in the next few weeks.

On the other side, we could see a decrease in the SP, based on the above premise and the fact that the offer might be oversubscribed and shareholders want to exit the small portion they have got left. There is also the wild card of the bad faith of Sir Corp and how they might screw us over in one way or another.

I think it is entirely possible to see a dip to $3.75 or $4.00 before a return past where we are now.  If that happens, that will be when I am buying in again for sure, little by little - to get back to the shareholding I had before I tendered a chunk.

That's my strategy - who knows if it is the right one!  But it will allow me to sleep at night to have a reset and have the optionality of cash.  SIR had grown to be my 5th biggest holding in my portfolio and by far the riskiest.  Everything is so opaque that you don't really know what the real situation is.

After 50% gains, it just felt right to play defence at this point and live to fight another day.