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]]> By: Dan http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2729 Dan Wed, 02 Aug 2006 17:18:56 +0000 http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2729 You should receive that information as a shareholder. It may include a document to file with your next tax return. You should receive that information as a shareholder. It may include a document to file with your next tax return.

]]> By: Rob http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2726 Rob Wed, 02 Aug 2006 15:21:10 +0000 http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2726 Any idea how much of my CD cost basis is being allocated to the two spinoff shares? Thanks for your help. Any idea how much of my CD cost basis is being allocated to the two spinoff shares?
Thanks for your help.

]]> By: Dan http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2480 Dan Tue, 25 Jul 2006 23:08:32 +0000 http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2480 Hi Jan: Yep, you're missing something here. While you'll have to consult a real tax advisor, what generally happens is that at the time of distribution, the basis of your ownership adjusts. So, there actually is no loss of $1241. If you buy 100CD @ 15.08, on August 1st those 100 shares have a tax basis of $2.67 - not $15.08. Your tax basis of the H and WYN shares adjusts to the value on the spin-off day as well. Of course, that's what generally happens - there may be something unique about this one that I'm not aware of. Hi Jan:
Yep, you’re missing something here. While you’ll have to consult a real tax advisor, what generally happens is that at the time of distribution, the basis of your ownership adjusts.
So, there actually is no loss of $1241.
If you buy 100CD @ 15.08, on August 1st those 100 shares have a tax basis of $2.67 – not $15.08. Your tax basis of the H and WYN shares adjusts to the value on the spin-off day as well.
Of course, that’s what generally happens – there may be something unique about this one that I’m not aware of.

]]> By: JAN http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2475 JAN Tue, 25 Jul 2006 18:57:40 +0000 http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2475 Found these latest quotes: CD-wi 2.67, H-wi 24, WYN-wi 32.35 and did a quick calc: 100 CD = 100*15.08 = $1508 100 CD-wi, 25 H-wi, 20 WYN-wi = 100*2.67 + 25*24 + 20*32.35 = $1514 unlocks a negligible value. However, it's a "tax-free stock dividend." How that affects the numbers? The following occurs to me: buy 100 CD @ 15.08 = 1508 15% tax rate sell 100 CD-wi @ 2.67 = 267 + loss of 1241 -> 1242*.15 = 186 tax saving sell 25 H-wi + 20 WYN-wi = 25*24 + 20*32.35 = 1247 267 + 186 + 1247 = $1700 $192 / 1508 = +12.7% in six days, not that shabby Yet, in an efficient market this is wrong. Or did the arbitrage boys miss something ;-)? Or more likely, where did I go wrong :-(? Comments? Found these latest quotes:

CD-wi 2.67, H-wi 24, WYN-wi 32.35

and did a quick calc:

100 CD = 100*15.08 = $1508

100 CD-wi, 25 H-wi, 20 WYN-wi
= 100*2.67 + 25*24 + 20*32.35 = $1514

unlocks a negligible value. However, it’s a “tax-free stock dividend.” How that affects the numbers?

The following occurs to me:

buy 100 CD @ 15.08 = 1508
15% tax rate

sell 100 CD-wi @ 2.67 = 267 + loss of 1241
-> 1242*.15 = 186 tax saving

sell 25 H-wi + 20 WYN-wi
= 25*24 + 20*32.35 = 1247

267 + 186 + 1247 = $1700

$192 / 1508 = +12.7% in six days, not that shabby

Yet, in an efficient market this is wrong.
Or did the arbitrage boys miss something ;-) ? Or more likely, where did I go wrong :-( ?

Comments?

]]> By: Dan http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2419 Dan Mon, 24 Jul 2006 19:58:35 +0000 http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2419 Update: Cendant just posted <a href="http://www.cendant.com/investors/financial-data/vehicle_rental_financial_information.html" rel="nofollow">more detailed information on Avis.</a> As I read it, the sum of the pro-forma incomes of the four companies in 2005 magically exceeded that of Cendant as a whole. Hmmm... Anyway, I originally pegged the rental group at $3.5/share. It's currently trading on a when issued basis at $2.77/share. The Avis pro-forma numbers look like they support a price of $4/share. So, based on these very rough numbers, if there is a value play in the breakup, it's with the Avis/Budget group. Update:

Cendant just posted more detailed information on Avis.
As I read it, the sum of the pro-forma incomes of the four companies in 2005 magically exceeded that of Cendant as a whole. Hmmm…
Anyway, I originally pegged the rental group at $3.5/share. It’s currently trading on a when issued basis at $2.77/share. The Avis pro-forma numbers look like they support a price of $4/share.
So, based on these very rough numbers, if there is a value play in the breakup, it’s with the Avis/Budget group.

]]> By: Carnival of the Capitalists » Names@Work » Blog Archive http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2410 Carnival of the Capitalists » Names@Work » Blog Archive Mon, 24 Jul 2006 16:54:36 +0000 http://www.investorgeeks.com/articles/2006/07/18/cendant-breaking-up-is-hard-to-do/#comment-2410 [...] Cendant: Breaking Up is Hard to Do Chris Welch, one of the Investor Geeks reviews the recent Cendant breakup, and the impact for former Cendant investors. [...] [...] Cendant: Breaking Up is Hard to Do Chris Welch, one of the Investor Geeks reviews the recent Cendant breakup, and the impact for former Cendant investors. [...]

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