Arbitrage

June 25 - Montana Exploration (MTZ) is buying Gale Force Petroleum (GFP) in a stock transaction that will pay Gale Force shareholders 0.4655 shares or Montana. These are two micro-caps that have never before come across our radar screen but there is an astronomical, however risky arbitrage play here. At opening prices the deal implies about a 0.075 price for each Gale Force share (previously trading at 0.025). This would be a triple, but we know Montana will drop from these levels. It looks as though the market is going to level off around 0.045, which is still more than we would want to pay, but at 0.035-0.04 we would consider initiating a small position. Montana's stock would have to drop 50% to be equivalent to Gale Force at those levels and we just don't see any reason that should happen.

We had a 0.04 limit order on Gale Force that did not get filled. We eventually changed it to 0.035 and again no fill, so we are letting this one go.

June 11 - Trinidad Drilling (TDG) and CanElson Drilling (CDI) have agreed to a merger where CanElson will receive 1.0631 shares of TDG or $4.90 in cash. The shares would currently value to deal at $4.72 while the cash obviously values it at $4.90, so a small arbitrage option on CDI, which is currently trading at $4.63.

We closed out our CanElson shares for a 3.60% gain. There is still some arbitrage money that can be made here, but we made the easy money in a short time frame and have no intention of waiting patiently for the deal to close with our capital tied up just to get another 2-3%.

#CDITO #TDGTO #MTZV #GFPV