Yes, it does seem that this is much more than just an interest in Graffiti, which is small potatoes compared to the potential acquisitions it intends to make. Future private placements and warrents offered to the Fund would have a good chance of future profit as it's hard to imagine Graffiti going out of business with so much money available for them to borrow. As KH said, they're just acquiring profitable non-risky companies (for the most part) so the graffiti share price will continue to balloon (as well as the acquisitions near-guarantee revenues can go to pay any exceptionally high interest rates Mr Hedgey puts on the credit line for years to come).
Question: why would the $300M mystery company with $150M/year in profits be available for a buyout? (unless they plan a hostile one) Wouldn't they demand a significant premium to the tune of basically the entire $360M line of credit at the least (or more?) to sell their business to graffiti? Unless there is some massive synergistic reason (eg they are a movie company and could then use Graffiti to make games of all their movies, or something like that).
It would not be unreasonable to put a blue-sky 2 year target price to Graffiti of $5 - 10 or more if acquisitions continue to occur.
In the end, the value of Graffiti's products is almost moot and it becomes more about the acquisitions than anything else. Graff sounds like a good company to own...
Saredi
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