WWII 034: Merger Arbitrage Example $CVT Purchase By Vista Capital for 39% AROI, How to Invest $500, Unemployment Rate and Productivity Gains

In this episode, I shine the light on a merger arbitrage that closed in November 2016 that resulted in a 39% annualized return.

Main Topic: $CVT Take-Private Transaction by Vista Capital - 39% Annualized Return

The CVT transaction was a take-private transaction by Vista Capital. Vista paid $1.65B for CVT.

Cvent is a software company based in McLean, Virginia and is the market leader in web-based event management, venue sourcing, and strategic meetings management software. We have 1,900+ employees and 166,000 users in over 100 different countries.

Cvent was established in 1999 with the development of the Event Management tool. Since then the company has launched several other web-based software applications, including the Cvent Supplier Network.

The Cvent Supplier Network connects meeting planners with over 239,000 event venues and service providers globally. It is a free tool, allowing event and meeting planners to search detailed profiles of venues and service providers, send requests for proposals (RFPs), and then compare bids, details and availability with side-by-side reports. Cvent makes it easy to manage the event planning process and select the best suppliers for your event.

Deal announced: 4/17/2016

Deal Closed: 11/29/2016

Deal Price: 100% Cash $36.00

Weighted Average Cost was $32.45

Weighted Average Return was 10.8%

Weighted Average Annual Return was $39.3%

Here are some of the critical articles:

This is a link to the press release announcing that Vista Capital is buying CVent

http://investors.cvent.com/press-releases/2016/04-18-2016-131121079.aspx

Here is the final press release announcing that the transaction closed on 11/29/2016

http://www.businesswire.com/news/home/20161129005797/en/Vista-Equity-Partners-Completes-Acquisition-Cvent

At one point, the Department of Justice requested additional information

http://www.meetings-conventions.com/News/Meetings-Technology/Vista-Equity-Partners-Cvent-Department-of-Justice/

Here’s a blogger talking about the ins and outs of this transaction.

http://www.exhibitionworld.co.uk/2016/05/19/thoughts-vistas-pending-cvent-acquisition/

Monopoly definition:

https://www.justice.gov/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-2

"Berkshire Hathaway's arbitrage activities differ from those of many arbitrageurs. First, we participate in only a few, and usually very large, transactions each year. Most practitioners buy into a great many deals perhaps 50 or more per year. With that many irons in the fire, they must spend most of their time monitoring both the progress of deals and the market movements of the related stocks. This is not how Charlie nor I wish to spend our lives. (What’s the sense in getting rich just to stare at a ticker tape all day?)"

Warren Buffett
Bershire Hathaway

Ask JB: Getting Back Into The Market

Out of the game for 4-5 years, trying to get back into it... where do I start? (self.investing_discussion)

submitted 5 days ago by urban_

Hey all,

I'm trying to get back into the game this year. It's been a while since I actively managed a portfolio with a few trades a week. To be precise, I was very in tune around 2008-2010 with $50K+ invested in stocks across various technology, energy, pharma, and financial services companies. I still have a few of those investments, but have sold most of it off.

I'm sitting on a 'hands off' dividend-focused portfolio right now, but want to get back into the swing of it. Yet I still feel nervous about getting back in. And also a little intimidated with the fact that I'm essentially starting over from scratch.

Not looking for stock recommendations or portfolio advice, but any tips on the transition? What should I do now? What can I hold off on doing/learning later? How would you do it if you were in my spot?

Thanks!

JB Says:

1. Start with a plan. What are you trying to accomplish?

2. If you make a commitment, make it for at least five years

3. Start with some simple screens for value stocks

4. Or coat-tail by looking at Gurufocus.com and reverse engineering a guru's holdings

I Just Opened A TDAmeritrade Account--How Much Is Enough? (self.investing_discussion)

submitted by blthecamera

Good morning,

I have $500.00 to fund this account right now. I've seen some tips saying investing isn't worth it unless you have $2K to play with for each stock. I'm 37 and don't plan on doing anything more than funding it by about $3K a year and not worrying about it for at least 15 years. My question is threefold: 1. what to do with the $500.00 (I was looking at New York Times stock) 2. is $500 even worth investing or should I wait until I have $2K? And 3. what do you wish you knew when you first invested in the stock market. Thank you for your time.

JB Says:

  • Make sure you meet the minimum suggested financial status before investing. Listen to episode 6 first
  • If you insist on investing this amount, choose two value stocks and split the funds up. You will pay 3-4% in commissions.
  • Keep adding to the account each month and over time the commissions won't eat in to the returns as much.
  • Use the time to learn as much as you can about value investing.
  • It's better to make mistakes (you will) with small amounts now, rather than large amounts later.

News: Unemployment Rate has fallen to 4.6%, but actual unemployment is much higher

About the Author

Jeremy Scott Bailey is an investor, author, entrepreneur and host of the "What Works In Investing?" podcast now available on iTunes. He is founder and Chief Investment Officer of Burgeón Group, Inc. an investment advisory firm that provides portfolio management services to families and individuals.

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