Denali Investors 2009 Annual Meeting [Slides]

Denali Investors 2009 Annual Meeting [Slides]

Denali Investors‘ slides from the 2009 annual meeting.

An Uncommon Fund…

  • Modeled after the original Warren Buffett
  • Partnerships hedge fund of the 1950’s
  • Value-Based
  • Special Situations
  • Opportunistic
  • Concentrated
  • Net Cash

Our framework is rare in today’s world


Objective: Produce superior long-term absolute and relative returns versus the S&P index

ValueWalk’s December 2021 Hedge Fund Newsletter: Hedge Funds Avoid Distressed China Debt

InvestWelcome to our latest issue of issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring hedge funds avoiding distressed china debt, growth in crypto fund launches, and the adapting venture capital industry. Q3 2021 hedge fund letters, Read More

Strategy: Combine “Generals” and “Workouts”; Focus on identifying value-based investment ideas and margin of safety

Portfolio: Build a portfolio of 5 – 15 very attractive, non-market correlated investment ideas which have high conviction through fundamental research

“Generals” + “Workouts”


  • Undervalued stocks
  • Neglected
  • Long time horizon
  • Favorable risk/reward
  • Shorts
  • Flawed business, management
  • Unrealistic expectations
  • Negative catalysts


  • Non-recurring; Catalyst
  • Internal/External
  • Mergers
  • Tender Offers
  • Spin-offs
  • Capital Structure Arbitrage
  • Reorganizations
  • Liquidations
  • Bankruptcies

Flexible search for opportunities…

Investment Philosophy

Value: Buy Cheaply. Invest at steep discounts to intrinsic (business) value

Fundamentals: Be an Owner. Approach investments as an owner of a business, rather then chasing momentum or technicals

Concentration: Be Selective. A handful of great, highconviction ideas is better than a hundred mediocre ones

Long-term View: Use Time. Patient long-term investing creates a distinct advantage over short-term speculation

Net Cash: Don’t Risk Ruin. Leverage is hazardous no matter the number of PhD’s

Deal Background

Precision Drilling (PDS) buys Grey Wolf (GW)

  • GW and PDS announced a merger in Aug 2008
  • Tail end of an energy boom.
  • The election merger consideration for each GW share was either 1) $9.02 in cash per share, or 2) 0.4225 share of PDS. Election subject to proration.
  • By December 2008, in combination with the market market, GW traded down from $9 per share to about $6 per share. PDS from $20 – 25 to $6 – 7 per share.

An opportunity hiding in plain sight…

Possible Outcomes

Outcome Band includes:

  • The deal closes (PDS buys GW)
  • The deal breaks (PDS does not buy GW)
  • GW shareholder makes cash election
  • GW shareholder makes share election
  • GW shareholder makes no election (defaults to share election)

Something in between…

Ways to Place an Investment The Approach…

“Short” GW & hedge PDS

  • Counterintuitive (typical to long target / short acquirer)
  • Tactics are critical
  • Standard merger arb analysis on GW alone is limited
  • Insurance/hedge “cost”
  • Combination increases safety
  • “The Ratio” – 1/10 risk/reward ratio

See full PDF below.

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