First case: Bluestar Airline Insider Trading
l Undisclosed information: Will not suffer suspension → get more route → compete with big guys
l Gekko's decision: stock deal of 200,000 shares with price around $15 per share.
l News that Bluestar exonerated
l Share price increase to around $18 per share.
Second case: Teldar Paper leverage buyout LBO
LBO is usually a merger and acquisition method adopted by financial buyers, using target's future income to repay the acquisition payment paid by bidders. Because there is no restriction on finance assistance in the United States, the possible operation modes may be A: bidder uses bridge loan, first acquires target and obtains control, and then uses target's property to repay B: bidder directly obtains target's finance assistance, to As the responsible entity, target makes a mortgage loan, and the money is used to acquire target.
This is a hostile takeover, so direct access to finance assistance is unlikely.
l On Gekko's birthday, before leaving, Bud heard that he had acquired 5% of the shares and was continuing to acquire
(Share deal buys shares directly from shareholders, avoiding board resolutions, so hostile takeovers are possible)
l Bud asked his friends to open new accounts and buy 500,000 shares of Teldar Paper in batches for $26
l Teldar shareholders meeting, the directors recommend that shareholders refuse to continue to sell shares and carry out share restructure. Gekko's speech condemns the board's agency cost.
The third case: Anacott Steel stock price manipulation (Anacott Steel)
l Bud deduced from Larry Wildman's trip (heavy financing from investment banks to Erie, PA) that he was buying Anacott Steel.
l GEKKO's three-step strategy:
s 1) Call option calls option, Gekko's decision is to buy 1,500 July 50 calls, which means the quantity is 1500 shares, the exercise date is in July, and the exercise price is $50 per share.
s 2) Using an offshore account to buy shares to drive up the share price to $50 per share, while the market price of Anacott Steel was around $46 at the time.
s 3) The news that the top investors took a fancy to Anacott Steel and acquired the stock, let more people come in, the stock was in short supply, and the price continued to rise.
l Larry Wildman's goal is not liquidation, but turn it around, so Larry will not sell the stock at will, and finally Larry will buy Gekko's stock of Anacott Steel for $71.5.
Fourth case: Blue Star Airlines merger
l Gekko's decision: there is a 4-year syndicated revolving loan supporting the takeover of Bluestar Airline, and the only way to repay the loan is liquidation.
l $19.25 → Gekko's acquisition information led to stock price increase → Bud followed suit → stock price rose to $22 → Gekko continued to buy → Bud sold a lot → stock price plummeted → Gekko dump it → Gekko was out
The most impressive line is the opposition between democracy and free market expressed by Gekko.
After researching for a night, I found that none of the cases have been completely understood by me. For example, in the case of Anger Steel, the role of options should be risk hedging, but I don't understand how. The closing price of the day when Wildman went to Gekko should be around $51, and the valuation given by Bud that night was $80. Is it a valuation with a premium or the film omits the stock price increase in the middle days. If it's the latter, it's understandable, after all, the stock price has risen to $80, and Gekko can exercise the option for $50.
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