Tender Mercies is the 1983 film staring Robert Duvall, which tells the story of a recovering alcoholic country singer whose life and career gets turned around. I'm no singer or boozer. But my experience with ArmorGroup International PLC included a stock price roller coaster ride equivalent of the wildest binge. And mercifully, it had a happy ending with G4S PLC making a tender offer for my shares.
Here's how this script played out from the beginning.
In September 2006 I reported buying ArmorGroup
, which traded in London under symbol ARG (with some shares available OTC in the US under symbol AMGPF). The shares were first mentioned here at US$1.03, right around tangible net asset value.
The stock then proceeded to increase nicely, and very nicely in US Dollar terms. It nearly doubled in price and may well have in intra-day trading. Then towards the end of last year the stock began trading down, and absolutely plunged earlier this year, getting as low as 19 pence in the UK. The primary reason was increasing costs in doing business in Iraq and Afghanistan, plus rumors some contract wins would prove unprofitable (because of under-bidding).
Underscoring all this was the fact that ArmorGroup stock traded very thinly, so it didn't take much to move the stock up or down.
Anyway, without any hardcore information, I started feeling I'd be lucky to get my original capital back.
But then G4S made a tender offer for ArmorGroup at 80 pence per share. I told my broker to sell my shares, and today I cashed out at a tad more than US$1.58 each. Throw in some nice dividends and this position has closed out with a gain of 61.3% (more than 36% on an annualized basis).
Despite some scary parts in the middle, we get a profitable ending that's music to the portfolio's ears.