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CBS - ENTERCOM exchange offer

Questions about updating prices or transactions in Fund Manager

Postby flight » Sun Nov 19, 2017 7:57 am

Mark,

CBS and Entercom are undergoing an exchange offer, where each 1 share of CBS gets exchanged for 5.6796 shares of ETM.

As a result, I have purchased CBS and will be receiving shares of ETM.

For purposes of FM, I am proposing just booking a purchase of ETM, and adjusting the purchase price accordingly.

For instance, if I purchased 100 shares of CBS @ $57.50, my cost basis is $5,750. I will record a buy of ETM for 567.96 shares for $5,750 instead. I will then download the historical prices for ETM. I would expect to see positive TWR as the value of the 567.96 ETM shares > 100 CBS shares.

What are your feelings on this approach?

Alternatively, I could record the purchase of CBS and then do a Transfer out/Transfer between CBS and ETM. But if gets tricky on recording the correct market values and correct prices. In fact, one of the prices has to be manipulated in order for the market value of the transfer out to equal the transfer in, so the TWR will benefit from the appreciation. This is a topic we've (you and I) have discussed in different posts previously. Hopefully I am articulating accurately.

thanks
flight
 
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Joined: Sun Jul 27, 2014 11:03 am

Postby flight » Sun Nov 19, 2017 8:02 am

" I would expect to see positive TWR as the value of the 567.96 ETM shares > 100 CBS shares."

What I meant to say:

I would expect to see positive TWR as the value of the 567.96 ETM @ current market prices is > than the cost basis implied by the purchase of CBS shares.

For instance ETM is trading @ $11.45 at Friday's close versus the implied purchase price of $9.8775 (567.96 ETM shares / $5,750 cost basis for CBS)
flight
 
Posts: 151
Joined: Sun Jul 27, 2014 11:03 am

Postby Mark » Sun Nov 19, 2017 10:39 am

Hi flight,

You still retain your CBS shares, right? This sounds like it would be better to use the Spin-Off Wizard. Right mouse click on your existing CBS, and choose "Investment Data / Spin-off...". The spin-off wizard records 2 distributions in the parent: RofC and Other. The RofC is however much cost basis you choose to move to the spun-off child. The RofC plus Other distribution sum to the market value you enter for the spun-off child. Shares are transferred into the child, in either a tax-free or taxable manner. You choose. See "Help..." in that dialog for more details.
Thanks,
Mark
Fund Manager - Portfolio Management Software
Mark
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Postby flight » Sun Nov 19, 2017 11:43 am

This is an exchange offer, conceptually similar to a stock-for-stock merger.

Do not retain CBS stock. You have 1 stock, and completely exchange it for another stock.

we've talked about it in some previous posts.

viewtopic.php?f=6&t=4127&hilit=transfers

That said, regardless of your preferred method, I'd like to hear your thoughts on my method:

For purposes of FM, I am proposing just booking a purchase of ETM, and adjusting the purchase price accordingly.

For instance, if I purchased 100 shares of CBS @ $57.50, my cost basis is $5,750. I will record a buy of ETM for 567.96 shares for $5,750 instead. I will then download the historical prices for ETM. I would expect to see positive TWR as the value of the 567.96 ETM shares > 100 CBS shares.
flight
 
Posts: 151
Joined: Sun Jul 27, 2014 11:03 am

Postby Mark » Sun Nov 19, 2017 11:47 am

Hi flight,

If it is an exchange, I would recommend doing a split and a name change instead.

You can do the buy if you want, and it isn't so bad if you only bought it once, but if you bought it multiple times it would be more difficult.
Thanks,
Mark
Fund Manager - Portfolio Management Software
Mark
Site Admin
 
Posts: 11252
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Location: Chandler, AZ

Postby flight » Sun Nov 19, 2017 12:12 pm

Thanks Mark, but even using the split and name change, there's actually more to it, correct? Doesn't the downloaded prices impact at all?
flight
 
Posts: 151
Joined: Sun Jul 27, 2014 11:03 am

Postby Mark » Sun Nov 19, 2017 4:04 pm

Hi flight,

If you use the split/name change method you would be using the historical CBS prices before the split, and pricing for Entercom on/after the split. As long as you had CBS pricing before the split you wouldn't download any historical pricing.
Thanks,
Mark
Fund Manager - Portfolio Management Software
Mark
Site Admin
 
Posts: 11252
Joined: Thu Oct 25, 2007 2:24 pm
Location: Chandler, AZ


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