Fat Pitch Financials Contributor’s Corner Review

Fat Pitch Financials is run by George, a guy constantly scouring the investment world for arbitrage opportunities. In his words, his quest is to “find dollar bills for 40 cents…” He used to publish all his arbitraging notes for free but the traffic got so high that he considered taking it all away until a friend suggested he ask for donations - a fair request I think. Well, I asked George if I could have a peek at what was actually back there and write a review and he agreed. My plan was to try one of the arbitrage opportunities he found, go through the trials and tribulations, and write about it. Suffice it to say the result was positive and George has recently revamped the entire Contributor’s Corner section so it’s much more streamlined, searchable, and sexy.

Basically the idea behind Contributor’s Corner is to identify and capitalize special opportunities and transactions in the stock market. For example, if a company files with the SEC to go private and is willing to buy back their all their common stock at $4/shr and the stock is currently trading on the open market at $3.50/shr, that’s an opportunity to make a 14% return.

The deal I saw and bought in on was for a company called Cap Rock Energy Corporation. on November 4th, 2005, Cap Rock Holding Company announced it was going to acquire Cap Rock Energy Corporation and acquire all outstanding shares of common stock, paying $21.75 a share. This was an obvious play by Cap Rock to avoid Sarbanes-Oxley accounting rules since they only apply to publicly traded companies (I believe).

I purchased 208 shares at $20.5219/shr back in November and this month I “sold” them at $21.75/shr, a gain of $1.23/shr or $255.44. Usually the deals close much sooner than five or six months but it was a return of nearly 6% over 6 months with little risk.

Is it really that easy? Yes and no. If you are patient, you can always make a little bit of money over the course of many deals. The only risk you run into is if the deal/transaction falls through for one reason or another. I watched a similar deal almost fall through and then complete. In that situation, the stock jumped on news that the company was going private and paying out shareholders, then the stock dropped when word that the deal might fail got out, then it spiked back up when the deal was approved by regulators. If you held on the entire way, you pocketed a nice sum of money. If you sold on the dip and into the fear, you would’ve lost money.

George really does his homework before he lists something and he usually puts his money where his mouth is, buying and publicly commenting on the deals and his returns - something that shows me he has confidence in his research.

Is this something you can do yourself? Of course, just scour the SEC listing for the filings and research the companies yourself. Then track them in an excel spreadsheet or something like that, remembering to follow the activity at each step of the way. You can do all that if you’re willing to put in the time and the effort that George does. Or, you could send $90 George’s way and he’ll set you up with an account for an entire year (or $10 a month if you want to check it out that way).

Another part of the site that contains a tremendous amount of value is the forums. I don’t know how many active members there are (it’s not a huge number, but its active) but the ones that are there contribute to the discussion of a particular deal and bring in whatever information they have.

For a taste of what you could see, he has an extensive archive of past deals and the results. It’s really just a taste, there’s a lot of information that you don’t see that I think is worth the $90/year fee. As of this writing, there are 24 active “going private” transactions, and handfuls of Mergers, Odd-Lot Tenders, and Spinoff deals. Overall it’s a wealth of information that would take you countless hours to put together.

George did not pay me or otherwise compensate me for this review. I realize it sounds very favorable, because it’s a very useful service he’s providing, and the only thing I did get was access to Contributor’s Corner so I could see his recent updates.