If your club owns CELG, you may be aware that they are being bought by Bristol Meyers.
There are a couple of issues related to this transaction that you should be aware of as they will affect your club accounting.
This will be a taxable transaction. When it happens it will be as if you have sold your CELG shares for the total fair market value of what you will receive in the merger. That will be cash, BMY shares and something called "Contingent Value Rights " (CVR's).
The CVR's are the right to receive an additional payment in the future if certain drugs which CELG has in for approval do eventually get approved. They are also what will create headaches for you in your accounting as they need to be carried on your books as an asset.
Your club accounting is dependent upon accurate valuations each day. It will be difficult to put a proper value on these rights. If they are traded in the market, their value will depend on how likely the market feels the chances are that the drugs in question will be approved.
It may be that you will have to manually update their prices. That will make your accounting less accurate until either they become worthless or they pay out. It could take several years for this to happen. In the meantime, it may be difficult to dispose of them.
This merger is scheduled to close this quarter. We'd highly recommend you consider selling your CELG shares soon, before it happens, to avoid the ongoing accounting headaches that are going to come with it.
Laurie Frederiksen Invest with your friends! www.bivio.com
Won't the fact that Bristol Meyers has agreed to list and maintain the CVRs on a US exchange until they are all liquidated mitigate the accounting valuation risks?
Thank you!
Lori
On Jul 16, 2019, at 12:11 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
If your club owns CELG, you may be aware that they are being bought by Bristol Meyers.
There are a couple of issues related to this transaction that you should be aware of as they will affect your club accounting.
This will be a taxable transaction. When it happens it will be as if you have sold your CELG shares for the total fair market value of what you will receive in the merger. That will be cash, BMY shares and something called "Contingent Value Rights " (CVR's).
The CVR's are the right to receive an additional payment in the future if certain drugs which CELG has in for approval do eventually get approved. They are also what will create headaches for you in your accounting as they need to be carried on your books as an asset.
Your club accounting is dependent upon accurate valuations each day. It will be difficult to put a proper value on these rights. If they are traded in the market, their value will depend on how likely the market feels the chances are that the drugs in question will be approved.
It may be that you will have to manually update their prices. That will make your accounting less accurate until either they become worthless or they pay out. It could take several years for this to happen. In the meantime, it may be difficult to dispose of them.
This merger is scheduled to close this quarter. We'd highly recommend you consider selling your CELG shares soon, before it happens, to avoid the ongoing accounting headaches that are going to come with it.
Laurie Frederiksen Invest with your friends! www.bivio.com
Will the fact that Bristol Meyers has agreed to list and maintain the Celgene CVRs on a US exchange (until they are all liquidated) allow Bivio to pull in their daily trading value just like any other US exchange stock?
Thank you!
Lori
Laurie Frederiksen on
Hi Lori,
The fact that this will be a specialized security will mean there is a good chance it will not be included in our pricing database.
In that case, it would need to be tracked in your accounting as an unlisted investment and you'd need to make manual updates to its price whenever you needed a proper valuation to make accounting entries, run reports or prepare taxes.
This will add uncertainty to your record keeping and increase the chances for error.
Laurie Frederiksen Invest with your friends! www.bivio.com
Will the fact that Bristol Meyers has agreed to list and maintain the Celgene CVRs on a US exchange (until they are all liquidated) allow Bivio to pull in their daily trading value just like any other US exchange stock?
Thank you!
Lori
Peter Dunkelberger on
Personally, I believe that the decision to sell or not sell should depend upon a club's analysis of BMY's potential. The deal as currently structured, if one discounts the CVRs, is close to the current selling price of Celgene. So for each share of Celgene, a club will get $50 plus a share of BMY. So the important variable is the future price of BMY. If a club thinks BMY is a dog, then selling before the current deal is consummated (if it ever is) should be the path of choice. If a club thinks BMY is a ten-bagger, then hold on for the ride. Selling because of a minor (in my humble opinion) difficulty in tracking the price of the CVRs should not be the justification for selling.
A question--there are new stocks from IPOs and spinnoffs and mergers all of the time. What will be different about the CVR if BMY maintains an exchange for it?
Thanks,
Peter Dunkelberger
On Fri, Aug 2, 2019 at 11:19 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
Hi Lori,
The fact that this will be a specialized security will mean there is a good chance it will not be included in our pricing database.
In that case, it would need to be tracked in your accounting as an unlisted investment and you'd need to make manual updates to its price whenever you needed a proper valuation to make accounting entries, run reports or prepare taxes.
This will add uncertainty to your record keeping and increase the chances for error.
Laurie Frederiksen Invest with your friends! www.bivio.com
Will the fact that Bristol Meyers has agreed to list and maintain the Celgene CVRs on a US exchange (until they are all liquidated) allow Bivio to pull in their daily trading value just like any other US exchange stock?
Thank you!
Lori
Laurie Frederiksen on
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
As soon as I got Laurie's info email, Celgene became analogous to a REIT or an MLP, which are unsuitable investments for clubs and, as the treasurer I pushed hard for the club's immediate sale.
Typical investments and club life cycle events are challenging enough without adding manual tracking and transactions by the treasurer.
I am relieved.
Irina Clements, Treasurer
Streetbeaters
Best, Irina
On Aug 2, 2019, at 1:13 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
That might help you make a decision, but it will not help you avoid the accounting and valuation issues I described.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
I'n With you, Irene. I had responses from my members and sold the same day. We once bought a MLP by mistake and had to have my accountant do our taxes. Never again.
As soon as I got Laurie's info email, Celgene became analogous to a REIT or an MLP, which are unsuitable investments for clubs and, as the treasurer I pushed hard for the club's immediate sale.
Typical investments and club life cycle events are challenging enough without adding manual tracking and transactions by the treasurer.
I am relieved.
Irina Clements, Treasurer
Streetbeaters
Best, Irina
On Aug 2, 2019, at 1:13 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
That might help you make a decision, but it will not help you avoid the accounting and valuation issues I described.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Friday, August 2, 2019, 7:41:29 PM EDT, Margaret Wentworth via bivio.com <user*25964300001@bivio.com> wrote:
I'n With you, Irene. I had responses from my members and sold the same day. We once bought a MLP by mistake and had to have my accountant do our taxes. Never again.
As soon as I got Laurie's info email, Celgene became analogous to a REIT or an MLP, which are unsuitable investments for clubs and, as the treasurer I pushed hard for the club's immediate sale.
Typical investments and club life cycle events are challenging enough without adding manual tracking and transactions by the treasurer.
I am relieved.
Irina Clements, Treasurer
Streetbeaters
Best, Irina
On Aug 2, 2019, at 1:13 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
That might help you make a decision, but it will not help you avoid the accounting and valuation issues I described.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
I'n With you, Irene. I had responses from my members and sold the same day. We once bought a MLP by mistake and had to have my accountant do our taxes. Never again.
As soon as I got Laurie's info email, Celgene became analogous to a REIT or an MLP, which are unsuitable investments for clubs and, as the treasurer I pushed hard for the club's immediate sale.
Typical investments and club life cycle events are challenging enough without adding manual tracking and transactions by the treasurer.
I am relieved.
Irina Clements, Treasurer
Streetbeaters
Best, Irina
On Aug 2, 2019, at 1:13 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
That might help you make a decision, but it will not help you avoid the accounting and valuation issues I described.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
Could I ask someone in the cafe to publish a simple list of do's and don't (or stay away from) when it comes to investing in ETFs, REITS, Bonds, etc. for an investment club using Bivio accounting? Some of our members want to go beyond stocks.
Thanks
Norm C Blizard
Sr Partner, Senior Center Services Investment Club, Columbus IN
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of ROBERT DEIMLING via bivio.com Sent: Monday, August 5, 2019 1:48 PM To: club_cafe@bivio.com Subject: Re: [club_cafe] Re: Does Your Club Own Celgene?
No
On Friday, August 2, 2019, 7:41:29 PM EDT, Margaret Wentworth via bivio.com <user*25964300001@bivio.com> wrote:
I'n With you, Irene. I had responses from my members and sold the same day. We once bought a MLP by mistake and had to have my accountant do our taxes. Never again.
As soon as I got Laurie's info email, Celgene became analogous to a REIT or an MLP, which are unsuitable investments for clubs and, as the treasurer I pushed hard for the club's immediate sale.
Typical investments and club life cycle events are challenging enough without adding manual tracking and transactions by the treasurer.
I am relieved.
Irina Clements, Treasurer
Streetbeaters
Best, Irina
On Aug 2, 2019, at 1:13 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
That might help you make a decision, but it will not help you avoid the accounting and valuation issues I described.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
Celgene might be something to avoid, but others might think that it isn't a problem.
I am not familiar with any problems with ETFs, but perhaps someone might enlighten me.
Master limited partnerships are a problem because of different types of distributions and multiple state K-1s which mean multiple state filings for the club. Same with REITs.
Could I ask someone in the cafe to publish a simple list of do's and don't (or stay away from) when it comes to investing in ETFs, REITS, Bonds, etc. for an investment club using Bivio accounting? Some of our members want to go beyond stocks.
Thanks
Norm C Blizard
Sr Partner, Senior Center Services Investment Club, Columbus IN
I'n With you, Irene. I had responses from my members and sold the same day. We once bought a MLP by mistake and had to have my accountant do our taxes. Never again.
As soon as I got Laurie's info email, Celgene became analogous to a REIT or an MLP, which are unsuitable investments for clubs and, as the treasurer I pushed hard for the club's immediate sale.
Typical investments and club life cycle events are challenging enough without adding manual tracking and transactions by the treasurer.
I am relieved.
Irina Clements, Treasurer
Streetbeaters
Best, Irina
On Aug 2, 2019, at 1:13 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
That might help you make a decision, but it will not help you avoid the accounting and valuation issues I described.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Monday, August 5, 2019, 10:03:27 PM EDT, Peter Dunkelberger via bivio.com <user*26984900001@bivio.com> wrote:
I think part of it depends upon your club.
Celgene might be something to avoid, but others might think that it isn't a problem.
I am not familiar with any problems with ETFs, but perhaps someone might enlighten me.
Master limited partnerships are a problem because of different types of distributions and multiple state K-1s which mean multiple state filings for the club. Same with REITs.
Could I ask someone in the cafe to publish a simple list of do's and don't (or stay away from) when it comes to investing in ETFs, REITS, Bonds, etc. for an investment club using Bivio accounting? Some of our members want to go beyond stocks.
Thanks
Norm C Blizard
Sr Partner, Senior Center Services Investment Club, Columbus IN
I'n With you, Irene. I had responses from my members and sold the same day. We once bought a MLP by mistake and had to have my accountant do our taxes. Never again.
As soon as I got Laurie's info email, Celgene became analogous to a REIT or an MLP, which are unsuitable investments for clubs and, as the treasurer I pushed hard for the club's immediate sale.
Typical investments and club life cycle events are challenging enough without adding manual tracking and transactions by the treasurer.
I am relieved.
Irina Clements, Treasurer
Streetbeaters
Best, Irina
On Aug 2, 2019, at 1:13 PM, Laurie Frederiksen <laurie@bivio.biz> wrote:
That might help you make a decision, but it will not help you avoid the accounting and valuation issues I described.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Laurie. My opinion was based on discounting the CVRs to zero. That will not be reality but I think that is the better way to analyze a buy or sell decision, especially since the payout is binary (all or nothing).
Peter Dunkelberger
On Fri, Aug 2, 2019 at 12:21 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
This is completely different than a stock you'd receive in a spinoff that represents shares in a company.
This is more like an option or a warrant that has a fixed point in time when it will become worthless unless certain targets are met. Its value will depend on whether or not people who own it feel those targets will be met and how much of a market there is for the rights.
Analyzing whether it will be a good investment for your club will require different skills than analyzing a company. It will probably be thinly traded and more volatile than stock in a regular company, making it that much harder to put a good price on. Daily closing prices may be fairly far off from what your club could get if it decided to sell the CVR's after the fact.
This will add uncertainty to your club accounting for transactions that require a good club valuation such as determining member payouts for a withdrawal. Since you may not have a good price on the value of the rights, you could over or underpay someone. Member units received for contributions may vary more than they might also, affecting your club ownership and tax reporting.
It is obviously up to you to determine how you want to proceed. Our goal is to just raise awareness of the issue while there is still time to avoid it.
Laurie Frederiksen Invest with your friends! www.bivio.com