(This was not an investment made by the Hurdle Rate Unit Trust, please refer to the August 2023 Letter for more information)
On the 31 July 2023 Trinet announced its intention to launch a $1 billion fixed price tender offer at $107 per share in cash. As Trinet is on my watchlist of >200 companies I received this news via. email and was instantly interested in it.
Within this announcement the group included a priority allocation for “odd lot” holders of <100 shares, by and large ensuring that they would not be subject to proration on the implementation of the offer, or in other words, they would receive consideration for 100% of their holding. Furthermore, the offer document highlighted the key dates as being an August 28, 2023, expiration date and a September 13, 2023 repurchase date.
The primary risk was that the offer was dependent on the receipt of financing which I was highly confident they would be able to achieve and it was announced on the 17 August, 2023 that the financing condition was to be waived and henceforth the Tender Offer was amended to remove this as shown below. This all but guaranteed the implementation of the repurchase agreement.
Moving on to the trade itself, I did not undertake this within the Hurdle Rate Unit Trust, but did so using interest-free credit card debt (Using the Citi Payall feature which effectively allows for a free cash advance) and my personal brokerage account. However, it was discussed in the August letter that I intend to do more of this in the Hurdle Rate Unit Trust going forward. Fortunately, my initial purchase was on the 10 August 2023 at $104.70 before subsequently selling at $106.42 on the 14 August 2023 to do the JNJ/KVUE Split-off (More on this below) transaction. Once completed I repurchased Trinet on the 25 August 2023 (one day before offer expiry) at a price of $105.71. This double dip made my effective purchase price $103.99 per share, resulting in a +2.9%, or AUD +3.7% / $586.30 in profit per odd-lot holding (You can purchase odd-lots in multiple accounts for additional profits) for a 24-day holding period, an annualised return of +54.3% p.a.