Classic Greenblatt on a very small scale… SSW announced a tender offer to buy $150M in stock yesterday for $15 a share. That was a 44% premium to the closing price on Monday. As would be expected, SSW traded from $10.41 close on Monday to more than $13.50 the following morning. As institutional holders realized the tender was for only ~20% of the outstanding shares and they would be cut back if they chose to tender their stock the price declined to the $12.00 level. A quick read of the filing shows that odd lots of less than 100 shares will be given preferential treatment, and that the company would buy stock held in street name. The deal is set to close January 11th, meaning that if you were to buy 99 shares for $12 today you can realize a gain of $297 minus expenses. For Scottrade users that is a $7 trade + a $25 tender fee (you just have to call and ask them to tender for you) for a $265 profit in 4 weeks.

Of course there is always some risk in these situations – for example, if the SP 500 falls more than 10% before the deal is set to close the company has reserved the right to cancel the bid. However, this seems like a very low risk way to earn a 22% after fee, pre tax return. Annualized that is a 286% gain. Not bad at all.