Cash received for Advanced Nutraceuticals (ANII)

Value investing

I received the cash in my account for my 499 shares of ANII in my account yesterday, thus completing . To recap:

Date Action Balance
16 August 06 Bought 499 shares of ANII at 3.46 (1,726.54)
16 August 06 Commission charge on purchase (9.95)
8 September 06 Reverse split occurs
4 October 06 Cash in lieu deposited into account 1,996.00
Net gain +259.51 (14.9%)

The 14.9% received over a period of 50 days of investment is equivalent to 108.8% annualized, if you are accustomed to using this type of figure for comparison. From what I understand, the month it took between the reverse split and receiving the cash was about average for a special situations investment.

It’s interesting that when I initially called Schwab to confirm all the fees, they said the fee amount on a voluntary or involuntary reorganization would vary but would usually be $39. In this case (which would be classified as an involuntary reorganization), I wasn’t charged any fees or commissions for the conversion of the 499 shares into cash. I remember reading in the proxy statement that “[shareholders will] not be required to pay any brokerage commissions or other service charges in connection with the reverse stock split”, so whether Schwab charges a reorg fee might be decided on a case-by-case basis, and in this case, due to this clear stipulation in ANII’s proxy.

I like that with ANII, I didn’t have to do anything additional after I purchased the shares. Overall, this was a very hands-off, easy transaction. Unfortunately, easy gains like this one aren’t always around, but I certainly like the opportunity to have some extra cash via a good value investment whenever possible!


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3 Feedbacks on "Cash received for Advanced Nutraceuticals (ANII)"


How did you calculate your annualized return?


There was some debate about this on the special situations investing site.

You can either calculate annualized return based on a compounded (CAGR) basis, which would have made the annualized return more like 176.4%. (To see this, use the CAGR calculator under the “Online calculators” link on the right sidebar of this site and enter in initial=1736.49, final=1996, years of investment=50 days/365 days=0.137 and hit “Calculate”).

But that assumes that you’re compounding and able to reinvest the total amount you receive each time at the same rate again, each period.

If you don’t assume that and merely annualize the rate, then you’d take 14.9% and multiply by 7.3 (=365 days/50 days) to get 108.8%. This ignores compounding and basically says that I got 14.9% over 50 days, but at that same rate, if I had held it for a full year, I’d have made 108.8%. All theoretical numbers only meaningful for rough comparisons, of course!

Experiments in Finance’s Take on Contributor’s Corner - Fat Pitch Financials

[…] Ricemutt signed up as a paying member of Fat Pitch Financials Contributor’s Corner a few months ago and asked me if she could write about her experience. I agreed and she posted an article detailing her first ever special situation investment (Advanced Nutraceuticals)┬ábased on information posted in Contributor’s Corner. This past Thursday Ricemutt posted the results of her experiment. I’m happy and proud to report that Fat Pitch Financials Contributor’s Corner helped Ricemutt earn $259.51, a 14.9% gain. She calculated that her investment had an annualized return of 176.4% (APY). […]