Accepting Defeat – The Aleph Blog

Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control

Posted on 31 May 200831 May 2008 by David Merkel

Part of being a good investor is recognizing when you have lost, so that you can cut your losses, or focus on what can win in the future. Today, I recognize my loss on National Atlantic. Why today? After talking with a friend who knows more than me about appraisal rights in this situation, in New Jersey, in cash deals there are no appraisal rights allowed, unless specifically granted in the corporate charter. Here is an example from a NJ bank deal.

Ugh. It shouldn’t be this way, but it is. Maybe someone with deep pockets could sue NAHC and its board and management, jointly and severally for fraud, but those pockets aren’t mine. So, I look forward to the merger vote. I will vote my 0.15% of the shares “against,” but I realize the NAHC management plus the arbs hold enough shares to win. Personally, I really dislike the disinformation that they have written in their definitive proxy regarding runoff; they paint a scenario that does not ring true with my knowledge of the insurance business.

$6.25/share — It could be worse, right? No, probably not. 🙁

Full disclosure: long NAHC

David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures. Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions. Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.