MALL – UBID arbitrage Creative Computers Ubid Arbitrage – how it works Hidden dangers MALL vs. UBID June 8‚ 1999 Each Creative Computers shareholder receives 0.7159 UBID share for 1 MALL share December 9‚ 1998 MALL price is $22.75 UBID price is $35.6875 0.7159*$35.6875 = $25.55 UBID is more expensive than MALL !!! MALL-UBID arbitr 2 MALL – UBID arbitrage December 9‚ 1998 Long 1 share of MALL at $22.75 Short 0.7159 shares of UBID at $25.55 This position is guarantees
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maneuverability around the website is what the buyer demands to find exactly what one would want. It gives a feeling like the salesman is helping find the desired product‚ exactly. Both companies came into existence about the same time (eBay 1995‚ uBid 1997)‚ and uBid has been able to achieve moderate success‚ in comparison to the overwhelming sensation that eBay has become. This study will examine the seller and the buyer‚ and provide a look into what the conditions are to be afforded the opportunity to
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------------------------------------------------- NOTES SCM LLC 12.9.1998 – Elena raised $20 million for her new fund Interested in Ubid‚ recently had an IPO—lucrative Internet-sector investment? Mandate of generating 10% annual returns charge investors 2% management fee of assets under management an incentive fee equal to 20% of profits. Mandatory minimum investment horizon of 2 years Ubid & Creative Computers creative computers – a catalog distributer of computers and computer peripherals -opened retail
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75 with 10‚238‚703 shares outstanding‚ equating to a market value of $232‚930‚493.25. Creative Computers also had a book value of equity of $48‚466‚000. On the same date‚ the Ubid stock price was $35.6875 with 9‚146‚883 shares outstanding‚ equating to a market cap of $326‚429387.06‚ and the book value of equity for Ubid was -$3‚292‚000. In addition to assuming that Exhibit 2 gives estimates of market values for net working capital‚ PP&E‚ other long-term assets‚ and debt‚
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investments in Creative Computers and Ubid. Creative Computers sold approximately 20% of its Internet auction subsidiary‚ Ubid‚ to the public at $15 per share. Ubid’s stock price closed the first day of trading at $48‚ giving Ubid a $439 million market capitalization. On dec 9‚ Creative Computers had a market capitalization of $ 232 million (22.75 * 10‚238‚703 outstanding shares) whereas Ubid’s market capitalization amounts to $439 million. This indicates that Ubid currently has a greater market value
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Strategic Capital Management‚ Llc (a) Executive Summary: The objective of this report is to evaluate investment opportunities for Strategic Capital Management‚ LLC regarding stocks of Creative Computer and/or its subsidiary firm Ubid. The analysis deduces arbitrage to be the best investment strategy. Strategic Capital Management (SCM)‚ LLC: SCM is a recent entrepreneur venture founded by Elena King and two of her fellow classmates. The company has currently generated 20 million dollars and aims
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Was there an arbitrage opportunity on Dec 9? What should be the arbitrage transactions (long or short in each stock‚ number of Ubid shares for each share of Creative Computers)? Elena is required to post cash collateral for her short position. Should she borrow to purchase Creative Computers (CC)? The initial margin is 50% for both long and short positions. Assume that the arbitrage opportunity disappears when Ubid shares are distributed to CC shareholders. Without considering margin interests on both long and short positions
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Internet fraud is a problem that has become very widespread in recent years. Internet fraud was first monitored by the Internet Fraud Watch organization in 1996. The Fraud Watch has stated that each year after its inception internet fraud has increased. In 1998‚ the Securities and Exchange Commission established the Office of Internet Enforcement to fight online securities fraud which was another sign of how large the problem is becoming (Clausing). Despite the SEC¡¦s efforts this problem has
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Tutor: Mr. Nguyễn Đăng Hoàng Report Case Study : eBay Group 6-Tut1BA10 Members: Lê Huy Thắng 1004000075 Phạm Quang Hiếu 1004000024 Nông Hải Âu Trần Văn Thắng Lưu Tiến Linh 0907010020 1004000076 1004000041 CASE STUDY: eBay Question 1: Macro-environment forces: Five-forces model Assumption: all arguments are equally important. Elements Arguments rapid industry growth recent entry of new competitors (especially fixed Rivalry (high) price/online retailers) users have low switching costs eBay’s
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MGMT 314: STRATEGIC MANAGEMENT ASSIGNMENT 1: CASE STUDY – EXECUTIVE SUMMARY THE CHALLENGES FACING EBAY IN 2008: TIME FOR A CHANGE IN STRATEGY? SUBMITTED BY: CHAN LAI FENG ONG AINA ONG EE LING ELAINE MGMT 314 Strategic Management 3795457 3794106 3721668 Page | 1 Table of Contents Introduction ----------------------------------------------------------------------------------------------------------------- 3 eBay’s Business Model ----------------------------------------------------------------------------------------------------
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