How To Play The Yamana Spinoff And American Capital/Ares Merger

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December 29, 2016 7:08am NYSE:AUY

From The Gold Report: Money manager Adrian Day comments on Yamana Gold’s spinoff purchase rights and the American Capital/Ares Capital merger.


Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) purchase rights have now ceased trading. Although some shareholders may have been able to salvage a few dollars from selling these—depending on how many shares of Yamana you owned—given the “difficulty” some custodians seemed to have had in getting the rights into a saleable form, as the price fell from 33 cents to under a penny, we won’t attribute any value to these, and thus leave our cost basis for Yamana unchanged.

Yamana Gold Inc. (USA) (NYSE:AUY) rose $0.06 (+2.19%) in premarket trading Thursday. Year-to-date, AUY has gained 47.71%, versus an 11.21% rise in the benchmark S&P 500 index during the same period.

Shareholders of both American Capital Ltd. (ACAS:NASDAQ) and Ares Capital Corp. (ARCC:NASDAQ, 16.16) approved the long-awaited merger, expected now to close in January. Though there may be some volatility around Ares, the surviving entity, we are strong holders, and will look for an opportunity to add to positions, should it present itself. The strong short position in Ares—not unusual in an acquiring company—suggests the stock could be strong after the merger.

American Capital Ltd. (NASDAQ:ACAS) was unchanged in premarket trading Thursday. Year-to-date, ACAS has gained 28.14%, versus a 11.21% rise in the benchmark S&P 500 index during the same period.

Ares Capital Corporation (NASDAQ:ARCC) was unchanged in premarket trading Thursday. Year-to-date, ARCC has gained 20.15%, versus a 11.21% rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of The Gold Report.


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