Follow-Up: Market Leader, Inc. (LEDR)
LEDR was recommended by SmallCapInvestor PRO at $7.87 in Investment Digest
issue 736, dated February 6, 2013.
“Market Leader, Inc. (LEDR, Nasdaq) sold itself for too cheap. That’s my first
impression. The implied 18% premium on shares when the deal with Trulia (TRLA)
was announced wasn’t as high as I would have expected. Especially since the stock
is up 14% over just the last month, and up by 78% over the last 6 months. An 18%
premium? What the heck?
“I mean, don’t get me wrong, I’m thrilled that we’re showing a 48% gain after just
four months. But still, I was expecting a double here within 18 months.
“After the deal was announced—by the way, at the time announced it valued LEDR
shares at $11.33 per share using a combination of $6 in cash and 0.1553 shares of
Trulia—the ‘Breaches of Fiduciary Duty’ lawsuits started stacking up. And I think
there is a valid case to be made that management didn’t have shareholders’ best
interests in mind. ... In any event, the company is up for sale and one of three things
will happen:
“1) It will go through as originally outlined and we’ll get $6.00 plus a fraction of a
TRLA share (which is why LEDR hasn’t flat-lined at $11.33, there is the share-based
component which fluctuates). 2) Another offer will come in from a competitor, or
from TRLA. 3) The deal will fall apart.
“The best scenario for us is an offer at a premium or a sweetening of the TRLA offer.
In the other two scenarios we make around 48% or, potentially, we continue to
own LEDR ‘as is’ and our fate rises and falls on what the company does next. I like
to avoid drama, so I’m inclined to sell the stock now. But I’m also inclined to think
there is a sliver of a chance a better offer could come in, so I don’t want to get ‘all
out.’ Let’s see how shares act early next week. I may recommend you sell half or all
of your position soon.”
Tyler Laundon, SmallCapInvestor PRO, www.smallcapinvestor.com,
866-447-8625, 5/10/13