@AnfuhrerMitwut There is one weak spot to hypothetical scenario and it has to do with Baupost being at odds with Keryx mgt./BOD and suitor Big Pharma/3rd parties. The more one thinks about it, the more one cannot get arms around Baupost coming out “violated” after 4+ years. Seth Klarman is BIG player, smart as they come (so is Abrams) - “violated”, set-up, hoodwinked?? Hard to believe.
As mentioned in prior posts, with KERX pps in low $4’s, and Baupost cost basis at $8.08, Baupost is in the RED some +/- $225 million. At this juncture, the only way this holds water is if Baupost has been playing short for 4+ years and has generated massive profits from shorting against the box/options to offset/recoup nearly $500 million investment with short profits, and is riding free shares or close to it. But, Baupost has had a seat on the BOD since Butler became Director in Dec. 2015 and now, as per Keryx filing, supposedly, Enyedy. Wouldn’t that make Baupost an insider, privy to undisclosed public info. and unable to “insider short” since Dec. 2015? Baupost could however, have been borrowing its shares (incl. shares represented by conv. notes), say to Abrams Capital or other, and deriving interest income. But interest income would not offset nearly $500 million investment, unless, a potential scenario of borrowing and short profits via Abrams Capital or other reverts back to Baupost somehow. Sooo, possible scenarios, VERY ROUGHLY..
Scenario 1-Baupost NOT at odds with Keryx mgt./BOD and Big Pharma suitor/3rd parties, all in concert, somehow riding free shares, 59.2 million fully converted plus potential additional purchased at low since Jan. 2018 via private placement from remaining $73.2 million supplement, increasing holdings to say 75 million shares, and say, selling at $10/share would generate Baupost some $750 million in profits. (Since not at odds, all in concert, no “hostility” for control, no need for $100 million shelf). If remaining $73.2 million supplement offered and sold, we’re talking some 170 million outstanding incl. fully converted notes which, at $10, would equate to $1.7 billion for suitor less cheap shares purchased via 3rd parties.
Scenario 2-Baupost NOT at odds with Keryx mgt./BOD and Big Pharma suitor/3rd parties, all in concert, NOT riding free shares, 59.2 million fully converted plus potential additional purchased at low since Jan. 2018 via private placement from remaining $73.2 million supplement, increasing holdings to say 75 million shares and bringing cost basis to say $7. In this scenario, given not riding free shares, Baupost would need to sell at $17 to generate some $750 million in profits (Again, since not at odds, all in concert, no “hostility” for control, no need for $100 million shelf). If remaining $73.2 million supplement offered and sold, we’re talking some 170 million outstanding which, at $17, would equate to $2.9 billion for suitor less cheap shares purchased via 3rd parties. Don’t see $2.9 billion.
Scenario 3- Baupost AT odds with Keryx mgt./BOD and Big Pharma suitor/3rd parties, NOT riding free shares, 59.2 million fully converted plus potential additional purchased at low since Jan. 2018 via open market increasing holdings to say 65 million shares and bringing cost basis down barely. But, additional purchased not about bringing cost basis down, but rather, to fend off “hostility” (Abrams in the mix). In this scenario, remaining $73.2 million supplement AND $100 million shelf would be executed in favor of “hostile powers” behind holding pps “hostage” and attempting to supersede Baupost for control of company at cheap. In this scenario, Baupost being “violated”.
As stated, VERY ROUGHLY, but take your pick or if you have another scenario, welcomed.
Btw, remember, at 12/31/2017, retail still holding some 35% outstanding or 40+ million shares as per Nasdaq Institutional Ownership reporting. “Powers” looking to shake retail tree - AND smaller institutional/funds holdings. in this sense, keeping pps “hostage” sub-$5 going on 5 months, plays a role.
All the above, in my opinion..
