Well, there may well be other factors an investor might consider than the simple market cash value of FWR, and the daily cash equivalent value of a NOT share. Not the least of which would be the tax consequences, which would likely have lead to different net returns than the gross returns you've described.
For example, as in my own situation, I already have quite a number of trades this year that put me in the highest tax bracket due to capital gains. Any further capital gains will lead to tax at half the highest marginal rate, which knocks the market cash number down considerably (ignoring for the moment that the actual tax payment is four months hence). In contrast, the joint tax election provisions of the Noront offer allow me to set any reasonable nominal value for the deemed disposition of the FWR/NOT share exchange. I can, if I choose, create a substantial taxable loss (there is no escaping the tax man....I will simultaneously increase some future capital gains liability), which would offset my pre-existing tax burden from earlier trades. As I'm long on Noront in general, I chose to ignore the short term opportunity value of the taxes owing from a market sale (4 1/2 months until taxes due), yielding a comparative value of the cash sale vs. Noront tender that was very nearly a wash. Not quite, but within about 10%. Yes, I could have a deferral to April 2011 by tendering to Cliffs, but I never seriously considered that option.
Then I considered the value of the warrant. I'm not going to get too involved with how to value such a warrant, but I did say publicly that I'd pay 0.10 to any and all vendors of same. So, I'll go with 0.10 for the sake of argument. That value goes to the Noront tender side.
Then there are the intangible values. Cash is cash. But I could get hammered by the market during my dual trade (sale of FWR, purchase of NOT) due to market volatility. Events could easily be such that I didn't get the value I hoped to receive on the sale, and I may not get the price I wanted for the purchase, leading to a net value less than the market suggested I might obtain at the outset. The Noront tender was fixed, and had no commissions. And due to the flurry of news releases right before the deadline for tendering, I waited until the last moment for me to decide.....pre-market Thursday a.m., the morning after FWR set a volume high, and Noront fell. How do you predict the market after that?
Other intangibles include blue sky/consolidation synergies (already covered in some detail in earlier posts), the I-don't-like-those-people-at-Cliffs rejection value (that's priceless, as they say), the David-against-Goliath approval value (priceless also), and so on.
My financial analysis was nearly a wash, I didn't want to force myself to play the market during intense volatility, so the intangibles could now move to the forefront in my decision-making process. Ordinarily, those lesser factors would never obtain that prominence, but the money issues went to the background. So, faced with Cliffs vs. Noront, I went with my heart. And because of the depth of my personal analysis, I remain comfortable with my decision, and I slept very well. I honestly assessed my own situation, and I know that, because of my resultant comfort. I'm not the type to second-guess myself, or anyone else. Life is easier that way.
I'm long Noront, so the current market value does not dissuade me. I don't have a trader mentality. My DD tells me that Noront is undervalued (certainly relative to FWR at the current market), and if I just go with my actual ACB for the share exchange, I picked up more Noront at almost exactly $1, ignoring the warrant altogether. What's not to like about that? It's possible I could have gotten a better deal, but just as likely a lesser one, IMHO. This one is quite fine for me.
Lar
