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Msg  8148 of 8649  at  6/14/2019 6:23:36 PM  by

octopusink


 In response to msg 8147 by  LT2
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Re: NRE Friday close

 agree with all the post friday feelings so far, and just to expound on/with my rambling thinking out loud-
 
if a deal was imminent at 4/30 they would have just sped it up and got it done without extending. so figured nothing was coming in may.

the original window for termination with clny was 8-9 (?) months...theres no reason if they wanted to keep that randomly "open" they couldnt have extended it a long time, say to end of year. they didnt. they were specific- 2 months. after 8-9 long months, now 2 months. i dont think thats random...i think they strongly planned on a resolution one way or the other by then. could they extend again another 2 months? sure. but thats dumb. if theres nothing happening, just keep the window open til end of year or longer, or scrap it altogether.

conversely i also think if they thought it would be right up until 6/31 they would have said 7/31 to give some wiggle room.

so likely nothing in may and not right at the end of the window...my guess had been this past week and the next week coming is the window most likely in which we get news.

what that news is i think is totally up for grabs, and the longer beyond next week or so we go without a resolution i think the less chance of a favorable outcome.

so given all that i think late next week is the threshold for odds significantly changing against a positive NRE deal. obviously the longer it has gone day by day the odds have worsened already, but next week is pretty much it for me. weve been holding $16ish but with no news we will lose $16 shortly (short of a big REIT sector outperform next week to drag it up- dars chart shows we'd clearly be much lower already if the index wasnt helping support it).   although i will say the trading price of NRE is largely irrelevant at this point- NRE is a purely deal dependent binary outcome- its going to be up or down probably 20+% once we get a resolution.
 
if a "no deal" outcome is announced at end of month there is huge downside (i think like $10-$12 range). even if they say nothing and just extend the "deadline" again, i cant see how we hold in trading price given the negatives around an ongoing standalone NRE (sold all their most "attractive" properties, now left with ?, holding massive amt of cash so big slash in earnings, no plan forward, probable div cut, paying outsized fees for nothing, absurdly small scale for operations, crappy board, crappy management, crappy manager, etc, etc, etc).
 
after so much time and involvement i really hate to miss out on a deal. but i am way too outsized in NRE. and the downside risk compared to the potential reward is getting to the point where it just isnt worth being outsized anymore. if the odds were 50/50 for a $12 vs $19 outcome i think holding is the right thing to do. beyond next week though, i think we're rapidly fading below 50/50 odds. after much thought, i plan to begin lightening my holdings beyond the end of next week if no news. sucks but not sure how else to read this. maybe in the end they will surprise me, but gotta say, right now i'm more disappointed in how NRE is winding down than i was with NRF. i know many people were livid about the NRF deal and process at the time, but i thought NRF actually did well for themselves in their endgame deal given their circumstances. i'm not getting that feeling here as things progress.
 
have a great weekend all, and think positive for a surprise. 


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