TheStreet.com – Hedge fund managers are always bargain-hunting. An example is the recent interest in Price Communications (PR :NYSE – news – research – Cramer’s Take), aholding company whose sole claim to value is that its stock will become exchangeable into shares of Verizon (VZ :NYSE – news – research – Cramer’s Take) onAug. 15. A year after that, the limited partnership will be liquidated, and owners will get 0.52 shares of Verizon plus roughly $1.25 of cash for each share, says Andrew Baker, an analyst at CathayFinancial.
Currently, Price Communications trades at $16.76, and Verizon at $34.78. The ratio implies a discount in Price, which at Verizon’s current price would be worth $19.33, including the cash.
Of course, the exact return will depend on how Verizon will trade in August. But so far, the Price Communications trade looks like buying Verizon at a discount.
Last week, Sowood Capital Management, a hedge fund manager founded by former managers of Harvard University’s endowment, announced a 7.9% stake in Price, making it the third-biggest holder of the shares. In fact, the top three largest shareholders are all hedge funds, with Atticus Capital owning 19% of the stock and Westchester Capital Management 8%, according to regulatory filings.
