Terra Nova Financial (TNFG) – Investment Recap

Posted August 29th, 2011. Filed under Stock Updates

Last week marked the successful conclusion of my first liquidation investment – Terra Nova Financial (TNFG).

I originally picked up the stock back in October 2010, when the stock was trading below the lower bound of the director’s estimated liquidation range.

On August 15, the company distributed a press release announcing a final liquidation distribution of $0.103 per share payable on August 19, 2011.

This was a pleasant surprise, as TNFG’s March press release had estimated a final stub payment in the range of $0.04 – $0.07 per share.

Here are the final results of the workout:

TNFG - Liquidation Summary

Not stunning, but a nice result for my first attempt at this type of investment.

Joe Ponzio at F Wall Street summed up a good maxim for investing in workouts:

“The question is: Upon thorough analysis, do they offer safety of principal and a satisfactory return. To answer the first part, you must know the deal; to answer the last part, you must know the timeline.”

If you have followed the series of posts on TNFG, the one constant is my utter inability to predict the timing of the various payments – but I at least had a timeline and worst-case scenario in mind.

The lesson here is to always be extremely conservative when estimating the timing and return possibilities for these type of investments.

While the returns are certainly welcome, the best part about these types of opportunities is that they are largely uncorrelated with the rest of the market.

In these volatile times, I’d be very happy putting a much larger percentage of my portfolio into these types of scenarios, and will be actively searching for similar situations.

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One Response so far

  1. Olmsted says:

    One workout you may want to look into is Global Options Group. StableBoySelections has a good writeup at:


    You also may find the idea at the Distressed Debt Investors Club.

    My take, after a tender for most shares at $2.60 was oversubscribed:

    “Just got in this at 2.30. I have a net working capital (including cash and escrow) after the tender of around 10m, 3.5m burned until liquidation for 6.5m before earnouts. 9.6m earnout from Preparedness (assuming similar revenues to 2009-39m) and 1.96m earnout from Bode (assuming same as 2009 revenues of 33.4m) takes us to working capital+earnouts of 18.06m, or 2.92 per share. Is my Bode number too optimistic?

    A return of around 30%, not correlated to the market, hopefully (some of which) occuring in early 2012 doesn’t sound too bad.

    Thoughts on the tender results, anyone? I was looking to the insiders as a signal to what would be left over – hoping that low participation would signal their confidence in optimistic earnouts and a valuable stub. It seems most directors tendered most shares. Interestingly, the CFO and CEO did not tender the majority of their shares – according to recent forms 4. Are there still employee stock options outstanding that they need to get the price over?”

    It has been bouncing around between 2.20 and 2.45 since on very low volume.

    Keep those workout ideas coming!

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