John Bajkowski
is the president of AAII.
The Model Shadow Stock Portfolio is reviewed quarterly to determine stock sales and additions, a practice put in place since the portfolio’s inception in 1993. The quarterly portfolio review cycle is tied to the standard reporting cycle of most publicly traded firms in the U.S. Companies are examined for meeting the earnings, valuation, size and age sell rules of the Model Shadow Stock Portfolio. The next quarterly review is scheduled to take place near beginning of September 2021. Occasionally, a special situation arises that requires more immediate action.
On July 23, 2021, Model Shadow Stock Portfolio holding New Home Company Inc. (NWHM) announced that it had entered into a definitive merger agreement to be acquired by Apollo Funds, which is managed by affiliates of Apollo Global Management Inc. Under the terms of the agreement, Apollo Funds will commence a tender offer to acquire all outstanding shares of New Home Company for $9.00 per share in cash. The purchase price represents an 85% premium to the closing stock price on July 22, 2021, of $4.86 per share and a 51% premium to the 90-day volume-weighted average price.
The transaction values New Home Company at an enterprise value of approximately $338 million. Enterprise value considers both the market value of a company, along with its outstanding debt less its cash and cash equivalents.
New Home Company Inc. (NWHM)
New Home Company announced on July 23, 2021, that it had entered into a definitive merger agreement to be acquired by funds managed by affiliates of Apollo Global Management Inc. Under the terms of the agreement the Apollo Funds will commence a tender offer to acquire all outstanding shares of New Home Company for $9.00 per share in cash. The acquisition will transform the company into a privately held enterprise.
The current market price largely reflects the acquisition price of $9.00 per share, so the model portfolio position in New Home Company was sold on August 16, 2021, and the portfolio will hold the proceeds in cash until the full quarterly review is conducted near the beginning of September. The tender offer is currently scheduled to expire at the end of September 7, 2021. If you decide to tender your shares, you must notify your broker ahead of the scheduled expiration.
The next quarterly review of the Model Shadow Stock Portfolio will take place following the end of August 2021. Any changes to the portfolio will be announced at the time they are made in our Model Shadow Stock Portfolio Update emails (sign up at www.aaii.com/email).
Get updates about the portfolio that has outperformed the market by 211.9%
since inception!