Update 12/4/25 (by me). Shares sold; final profit of $890.54. My limit order was triggered yesterday and my shares were sold, closing out my position and finishing this deal. Here are my personal results, you may have done better or worse:
- Bought 99 shares of LEN @$122.29 (11/14) for $12,107.
- Tendered all 99 shares, exchanged for 409.53 shares of MRP (11/20 deadline).
- Received 409 MRP shares and $15.88 cash for the partial share (12/1).
- Sold 409 shares of MRP @$31.74 for $12,981.66 (12/3).
Net profit was $890.54. Total time between purchase and sale was 19 calendar days, working out to an internal rate of return (IRR) of 290.98%. (At 5% APY, my interest over 23 days on $12,107 would have been about $32.) I usually try to buy within a week of the tender deadline, and sell within a week of receiving the final shares, and it takes roughly a week to exchange so the total time is usually less than three weeks. The absolute ROI is 891/12107 = 7.4%.
Update 11/29/25 (by me). Check for exchanged shares. The final results have been released. My new MRP shares showed up after market close of Friday 11/28 in my Fidelity account, and probably in other brokerage accounts around this time as well. See original post below for past details, although the opportunity has passed.
The final exchange ratio was 1 share LEN to 4.1367 shares of MRP. The deal was oversubscribed, with a final proration factor of ~8.6% of shares tendered. However, those with “odd lots” of 99 shares or less were not subject to proration.
If treated as a short-term workout, your profit will depend on both your entry and exit price. This tender was drawn out due to the government shutdown, so your entry price could have varied widely, as low as around $115 per share. Mine wasn’t all that great at $122.29 x 99 shares = $12,107.
You would have gotten 409.53 shares of MRP, so 409 shares of MRP and a bit of cash later. At the Friday 11/28 close price of $30.46, 409 shares would be worth ~$12,458 for a rough profit of about ~$350 plus any fractional share payout later.
However, the actual price at which I will sell MRP is unknown. I don’t know how the market will open on Monday. I will note that 778,625 shares of LEN were tendered by odd-lot holders, which would now be about 3.2 million shares of MRP. Now, the 90-day average daily trading volume for MRP stock is only ~2 million shares. So if you think that all the odd-lot holders will want to sell, that might put some pressure on the stock for a while. I expect to watch things for a bit, but sell within a couple of weeks. Might put in a limit order.
If you did not hedge this bet (and thus losing some of the edge), then it is/was just a bet with a positive edge that you can still lose money on. Imagine you had to be “in the market” for a couple of weeks, but with a 6% buffer. If the market goes down worse than 6% during that time, you lose some money. Otherwise, you are ahead. For some, that is still too much risk. For others, it’s a gamble with an edge and they’ll take it using a appropriately sized portion of their bankroll. Personally, I would take that bet repeatedly. There’s a lot to be learned about investing with this little experiment. Again, please consider all the risks outlined in the original guest post below.
Update 11/14/25 (by me). Things moving forward. Things appear to have settled down, as this exchange offer had to be extended a few times due to the government shutdown (which includes the SEC). As it stands now, the expiration date is 12:00 midnight ET on November 21, 2025. Each broker will have their own cutoff time to participate in the offer, my Fidelity account shows a cutoff date of 11/20/2025 7:00 PM ET (although I’d call in before market close that day). I had to call in to tender my shares this time.
Lennar’s motivation to complete this exchange appears to remain strong, so my expectation is that it will go through. I make this update now because it means you still have time to do your own research (see risks explained in the guest post below), decide whether to buy 99 shares, and tender those shares. The site Envisionreports.com/lennarexchange remains a good place to see the updated live stats on this offer.
Original post 10/17/25:
From time to time, I participate in certain stock exchange offers which include a special provision for smaller investors, called “odd lot tenders”. You can find more background information on these short-term “arbitrage” plays in the last two offers that I joined: Cummins/Atmus Filtration and Johnson & Johnson/Kenvue.
Recently, Lennar (primarily a homebuilder) announced such an exchange offer as they try to complete their spinoff of Millrose Properties (an REIT, primarily a land bank). This time, Rich Howe of StockSpinoffInvesting.com – who has a lot more experience with these deals than me – has generously agreed to share his summary and analysis of the deal. Please enjoy the following guest post:
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Buy Lennar – Exchange Offer – Special Situation
October 15, 2025
LEN: $122.21
Market Cap: $30BN
Recommendation: Buy 99 shares of LEN, Exchange for shares of MRP
Expected Profit: $772 / 6.4%
Summary
Lennar (LEN) announced an exchange offer on October 10, 2025 whereby investors can exchange their LEN shares for shares of Millrose Properties (MRP), Lennar’s land bank spin-off. To incentivize the exchange, LEN investors will receive $106.43 of value in MRP shares for every $100 of value in LEN shares. I expect the exchange offer to be oversubscribed. However, there is an odd lot provision such that any LEN shareholders with 99 shares or less (odd lot provision) will not be prorated. Thus, there is an opportunity to buy 99 shares of LEN and exchange them for shares of MRP. This should result in a profit of ~6.4% / ~$757 (at current prices) in less than a month. The profit is not guaranteed (of course!) but is low risk, in my opinion. To participate in this exchange offer, you must contact your broker (you may be able to participate in the exchange offer online). It will not happen automatically.
Deadline: The exchange offer will expire on November 7, 2025. So this is time sensitive. Brokers typically require investors to give them notice about the exchange well before the official deadline. Schwab’s deadline will likely be November 5, 2025, but it would be prudent to buy on November 3, 2025 at the latest as it takes two days for shares to settle. I’m planning to buy 99 shares of LEN shares on or before November 3rd and then immediately call Schwab and ask to participate in the exchange offer. Other brokers (Fidelity, Interactive Brokers, etc.) have their own internal deadlines which are typically after the Schwab deadline.
Additional Details
Lennar (LEN) spun-off ~80% of Millrose Properties (MRP), its land bank, in February 2025.
It retained ~20% of the business.
On October 10, 2025, Lennar formally announced that it would spin off its remaining ~20% stake in Millrose Properties via an exchange offer.
I’ve highlighted key terms but you can visit the transaction’s live website with additional details.
For every $100 shares of LEN that you own, you will receive $106.38 of MRP shares.
Since this exchange represents an attractive return in a short period of time, I expect the offering to be oversubscribed (similar to previous exchange offers that I’ve covered).
However, there is an odd lot provision such that if you own fewer than 100 shares, you will not prorated.
Here is the exchange offer filing and a website which tracks the exchange offer indicative exchange ratio.
This offering is very similar to the many other split off/exchange offers that we’ve participated in.
Examples:
- CMI/ATMU Exchange – Unhedged trade worked well.
- JNJ/KVUE Exchange – Unhedged trade worked well (Iag shouldn’t have held onto KVUE shares).
- LLY/ELAN Exchange – Unhedged trade worked well.
- DHR/NVST Exchange – Unhedged trade worked well.
- ECL/CHX Exchange – Unhedged trade worked well.
- DD/IFF Exchange – Unhedged trade worked well.
- MMM/NEOG Exchange – Unhedged trade did not work.
How to Execute the Trade
LEN is currently trading at $122.21 per share.
MRP is currently trading at $31.96.
Here’s how the math works at current price levels.
Step 1
Buy 99 shares of LEN for $122.21 per share. Total cost of $12,099.
Step 2
Per the exchange offer, shareholders who elect to exchange their LEN shares will receive MRP shares at a 6% discount or at a price of $30.04 ($31.96 x (1-6%)). The MRP price hasn’t been finalized yet. But I’m using the current price plus the discount as I think that’s the best way to approximate what the actual price will be. The actual price will be determined by a formula laid out here.
$12,099 / $30.04 = 402.72 shares of MRP
402.72 shares of LEN / 99 shares of MRP = 4.07. 4.07 is lower than the max exchange ratio of 4.1367. If the ratio were higher than 4.1367, the number of MRP shares would be maxed out at 409 (4.1367 * 99).
Step 3
Sell MRP shares that are received once the exchange goes through. It usually takes Schwab about a week to process the exchange offer. I expect to receive my MRP shares by November 14, 2025 or shortly thereafter.
At current prices, the trade is expected to generate a profit of $772.
In terms of timing, the exchange offer expires on November 7, 2025 (unless LEN changes it), and so I recommend that you buy LEN shares no later than November 3rd to ensure you make the deadline (it takes two trading days for your purchase to settle and brokers internal deadlines are usually 2 days prior to the official company deadline). After you purchase shares, call your broker and ask them to tender your shares. This is important. Your participation in the exchange isn’t automatic.
I created a spreadsheet to track the profitability of this trade. Here is a screenshot of it:
You can access the spreadsheet here: LEN / MRP Exchange Offer Spreadsheet
(to edit, make a copy of the spreadsheet and plug in your own assumptions)
Thoughts on Millrose Properties?
Millrose was created when Lennar contributed ~$5.5 billion in undeveloped, partially developed, and some fully developed land assets, along with up to $1 billion in cash, to Millrose. Millrose operates as an independent entity, acquiring and developing land to deliver finished homesites under land option contracts. At the time of the spin-off, it only served Lennar but it plans to engage with other homebuilders as well.
Lennar pays Millrose option fees for the right to buy land on Millrose’s balance sheet.
This strategic move is part of Lennar’s ongoing shift toward an asset-light operating model, aiming to reduce financial risk and enhance returns by minimizing direct land ownership.
I’m happy to own Millrose Properties at a 6% discount, but don’t want to own the stock for the long term as I believe its ability to grow and generate upside is limited given Lennar’s right to purchase its land.
What are the risks?
LEN Sells Off
If you buy LEN, and it sells off prior to the exchange, you could lose money. I’m not particularly worried about this risk, as investors will likely continue to bid LEN shares up to take advantage of the share exchange.
A major sell off could happen if some random negative news hits LEN (for instance negative news in a lawsuit). This is unlikely but did happen during the MMM/NEOG exchange offer. JNJ also had a negative court ruling during its exchange offer, but the exchange was still profitable.
If LEN does sell off, it would have to sell off by ~6.4% for you to lose money. To minimize risk, you could also short out the MRP exposure.
I looked back at the performance of the parent during similar transactions and found that it usually performs well (average: +2.2%; median: +3.8%)
The Exchange Is Canceled or the Odd Lot Provision is Removed
Lennar wants to distribute its ~20% stake in Millrose Properties and this is an efficient way to do so. I don’t expect it to be canceled, but it’s possible.
The odd lot provision could be removed, however, this has never happened for split off transactions (that I’m aware of). Nonetheless, it could happen!
Millrose Properties (MRP) Stock is Weak After the Share Exchange Closes
If the share exchange closes and investors who’ve exchanged their LEN shares for MRP shares make 6.4%, but then MRP shares immediately depreciate by more than 6.4%, this trade will lose money. In other words, this trade can lose money even though the initial math looks favorable.
While this risk is valid, I’m comfortable participating in this trade and believe it represents an attractive risk/reward.
Disclosure
Rich Howe, owner of Stock Spin-off Investing (“SSOI”), doesn’t own LEN shares but plans to buy them. All expressions of opinion are subject to change without notice. This article is provided for informational purposes. We do not warrant the completeness or accuracy of this content. Please do your own due diligence and consult with an investment adviser before buying or selling any stock mentioned on www.stockspinoffinvesting.com.
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Just to confirm, and I can’t imagine any other tax treatment, but if all goes to plan and the profit is ~$772, that value would be considered STCG (short term capital gain), correct?
I assume the only exceptions are if you currently own LEN (for at least a year) and/or you own MRP for more than a year after this event – then LTCG in these cases.
Yes, should be short term cap gain if you convert and sell immediately for ~$772 profit.
Can you do this with 99 shares multiple times if they are in different brokerage accounts at different brokerages?
That’s worked for me in the past.
How about in multiple accounts at the same brokerage (say, a non-retirement account and a retirement account), for 99 shares in each account?
According to x.ai
No, odd lot status is not considered independently for each account at Fidelity Investments. Ownership for these purposes is determined by your Social Security Number (SSN), so Fidelity aggregates the total number of shares you hold across all your accounts (including joint accounts under the same SSN).
To qualify for the odd lot preference (typically for 99 shares or fewer), your total holdings must meet that threshold, and you must tender your full position from all accounts. If you have, say, 99 shares in one account and 99 in another, your combined total of 198 shares exceeds the limit, disqualifying you from the priority acceptance.
For your specific situation, review the offer details in your Fidelity account or call them at 800-343-3548 to confirm. Terms can vary by offer.
I think your comment about shorting MRP is noteworthy in that it is a way to essentially lock in the value differential now.
One would still have some transaction risk in that one might be stuck with a long position in LEN and a short position in MRP if the exchange were to not happen for some reason.
There would also be a cost for the margin on the short position. It’s probably minimal for a one month or so holding period, but if the exchange was delayed, it could be more.
There is also a different administrative step post exchange of having to call the brokerage to smooth out the long and short position in MRP versus just selling the long MRP.
You can definitely choose to hedge using options or shorting, with the added cost and complexity.
Once converted to Millrose stock, any lock-up or trading restrictions?
One risk to keep in mind from the offer details:
The Exchange Offer cannot be completed until the Registration Statement becomes effective. The SEC has announced that during the current U.S. federal government shutdown, the SEC will not declare registration statements effective. If the shutdown does not end by the anticipated November 7, 2025 expiration date, Lennar will either have to extend the expiration date or withdraw the Exchange Offer. If the shutdown is still in effect at midnight on October 31, 2025, Lennar will announce by 11:59 pm on October 31, 2025 whether it will (1) extend the Exchange Offer and, if so, the extended expiration date, or (2) terminate the Exchange Offer.
Good catch, making a note to check back on exchange status 11/3.
Exchange has been extended to Nov 14th.
https://newsroom.lennar.com/2025-10-31-Lennar-Announces-Extension-of-Expiration-Date-of-Exchange-Offer
Thanks for the update.
Looks like the ratio has ticked up to 4.16, which is above the max. How does this afect the odd lot tender offer?
I calculated $731 profit based on the max exchange ratio and using today’s prices. Someone please check my math.
The tender offer has been delayed 1 week.
https://www.sec.gov/Archives/edgar/data/920760/000119312525260936/d79548d425.htm
Thanks for the update.
I spoke to Vanguard today. The CSR said that the tender offer delay didn’t change the cut off date (Nov. 4th). Inquiring about a purchase today, I was told the Corporate Actions desk would make a “best attempt” to be included. Does anyone know how the tender offer delay affects participation?
The CSR is overpaid
Delayed for another week now
Should be good for Nov 21st
Len dropped -5.79% to $114.10 today (Nov 17 2025). It looks the risk is pretty high compared with potential profit of 6.4%. We will need to hold it for at least a few days for the transaction. It’s afterward a stock which may go up or down 5% in any day.
There is definitely risk. The stock price could go down and wipe out the 6% and then some, and it could also go up and make the profit much more than 6%. Goes both ways.
I just bought 99 shareds of LEN today, called Fidelity and told them to exercise the tender offer. Pretty annoying that there is no confirmation or anything on the website itself.
Lennar and Millrose are moving forward but deal still needs formal approval from SEC. I think I’ll sit this one out. https://finance.yahoo.com/news/lennar-confirms-expiration-date-exchange-124500537.html
For Fidelity, nothing shows up on my Activity & Orders page, even after I called into opt in to the offer. Anyone else?
I think my tender instructions showed up in the Activity timeline the next day or so. You can also go to the Corporate Actions page and scroll down to “Next Steps” and I see this:
“You fully participated in this offer. You don’t need to do anything else. If you change your mind and want to withdraw your election by Nov 20, 2025, you can do so by calling 800-544-8666. Once the event is complete you will see information on Activity & orders.”
https://digital.fidelity.com/ftgw/digital/corporate-actions/
Merrill Lynch charged a $30 fee to tender my shares. Is that standard at other brokerages too?
No, it’s not. They charged me that fee last year with Cummins/Atmus. When this one came around I called Fidelity and was told they had no fee for corporate actions. Some others don’t but E*Trade does, I believe.
did you have to call Merrill to initiate this tender? or was it online? which dept did you speak to?
Yes, I had to call Merrill. I asked if there was an option to tender shares myself online, and was told no. I was transferred multiple times. I don’t recall the title of the final person, but I think it was a trading specialist or something. Probably the same person you’d be transferred to to make a trade over the phone.
I would say that a fee for voluntary corporate actions is not uncommon, but many of the big brokers do not charge a fee. It does require some manual effort, but I guess the biggest firms like Vanguard, Fidelity, Schwab choose to absorb it. The amount does seem to vary from firm to firm.
Just as a follow-up to describe my experience with Merrill Lynch, 409 shares of MRP became available in my account after market close on Friday, Nov 28, and a $30 transaction fee was deducted from my cash balance at the same time. A week later, on Friday, Dec 5, after market close, $17.07 was credited to my cash balance for the 0.5333 fractional shares of MRP, suggesting a share price of $32. Interesting that Jonathan received $15.88 for his fractional share and that it seemed to have been credited at the same time as the MRP shares.
Interesting, maybe they just give the fractional shares in bulk to each broker/clearing firm and have them sell it and distribute the cash to their individual retail clients. Looks like Fidelity sold them on Monday; Merrill sold on Friday.
the LEN/MRP spreadsheet seems to indicate the profit will only be $294 per 99 shares because the 4.1367 max ratio was reached as of end of day prices on Nov 21. So it’s only a 2-3% profit, but if you bought LEN and it’s down 2-3% or you end up selling your MRP shares2-3% below the Nov 21 close, you will loose money. Is this correct? So there there is additional downside risk because the max ratio was reached above the natural market dynamics.
The max ratio was reached, but I don’t think it’s as bad as you make it. For example, I bought 99 shares of $116.27 for a cost basis of $11,510.83. Since the ratio was breached, I will be getting 4.1367 * 99 shares of MRP, ~409 shares. MRP is currently trading at $30.49 so the value will be 409 * $30.49 = $12,470.41 if nothing changes in MRP stock which is like 8.3% gain.
Yes, but you have a good entry point. My entry point is between $117.60-$123 per LEN share. If you purchased at publish date, your entry point would be $122.21. If you purchased anytime from Oct 15-Nov 14, your entry point for LEN is higher than $122.21.
I’ve participated in the KVUE and ATMU spinoffs with positive results. However this time because of the max ratio, was reached, the potential profit from the 6% discount was greatly diminished (by 2/3rds). MRP is up 2% today, so that helps. It looks like it was over subscribed 10x.
So the 6% gain from solely the spin-off and odd lot tender is actually 2.4%, the rest is good timing and market fluctuations. Thanks Jonathan, your money is making me money 🙂
Check again, latest data shows that the max ratio was not reached. I think something is off with your calculation that you’re getting 2.4%. Even when it said it was reached, a few days ago, the real ratio was very close to the max ratio regardless so it wouldn’t be a 50% drop.
The max ratio was reached. At current price levels of LEN and MRP, you would have made more money keeping and not exchanging LEN than participating in the exchange offer.
I don’t think my numbers are off, unfortunately. The 6% premium went to 2%, which evaporated when MRP dropped 3% today and LEN was flat (up 6% yesterday)
In the end, I just take it as a weighted dice roll, slightly in your favor. Some folks like that sort of thing, some folks don’t. Less than 10% of the LEN shares tendered not in odd lots were exchanged, so it’s not like it wasn’t popular. MRP can still go up or down from here, so it’s still up in the air, and if you really want to cap your risk you’ll pay attention to when the shares show up in your account and sell immediately. (Then you’ll probably see MRP go up a lot right after that, ha!)
Did anyone’s MRP shares show up yet?
it’s been 1 week and Fidelity still doesn’t show complete…
It hasn’t been a week. November 25th was the deadline to submit the notices of delivery, see https://finance.yahoo.com/news/lennar-exchange-offer-oversubscribed-ahead-172613280.html
I wouldn’t expect the MRP shares to show up for another week.
mine has when i checked today
Chase is unconscionably irritating and evasive in the way they process this sort of thing. A whole week after hearing an agent confirm that the order went through for tendering 99 shares, there is no online transaction activity to confirm it (compared to, e.g., Merrill as reported in comments above). Worse, when you call it, after 1/2 hour of transfer and long holds, they refuse to confirm that the order is in process: they only say “we recorded your order, and it was ‘responded to'” whatever that means — even though customers don’t receive a ‘response’.
The huge risk is that those of us who bought LEN low are currently ahead anyway after the markets rose the past few days — but we stand to lose a ton if these brokerages fail to tender the exchange because of human error. Accountability is everything in finance and Chase are absolutely horrible.
Chase is unconscionably irritating and evasive in the way they process this sort of thing. A whole week after hearing an agent confirm that the order went through for tendering 99 shares, there is no online transaction activity to confirm it (compared to, e.g., Merrill as reported in comments above). Worse, when you call in, after 1/2 hour of transfers and long holds, they refuse to confirm that the order is in process: they only say “we recorded your phone call, and it was ‘responded to'” whatever that means — even though customers don’t receive any ‘response’.
The huge risk is that those of us who bought LEN low are currently ahead anyway after the markets rose the past few days — but we stand to lose a ton if these brokerages fail to tender the exchange because of human error. Accountability is everything in finance and Chase are absolutely horrible.
[Is there something about my below comment that justifies silencing it? Or am I seeing a failure/delay in the comment moderation that it gets deleted?]
Chase is unconscionably irritating and evasive in the way they process this sort of thing. A whole week after hearing an agent confirm that the order went through for tendering 99 shares, there is no online transaction activity to confirm it (compared to, e.g., Merrill as reported in comments above). Worse, when you call in, after 1/2 hour of transfers and long holds, they refuse to confirm that the order is in process: they only say “we recorded your phone call, and it was ‘responded to’” whatever that means — even though customers don’t receive any ‘response’.
The huge risk is that those of us who bought LEN low are currently ahead anyway after the markets rose the past few days — but we stand to lose a ton if these brokerages fail to tender the exchange because of human error. Accountability is everything in finance and Chase are absolutely horrible.
Tendering shares is something of a manual process, no matter what broker you use. I would say that if the preliminary results were posted on Monday, I would not expect the shares to arrive until about 3-4 business days afterward. I just check once each morning. Sometimes there is selling pressure that first day and it’s actually better to sell later on. But again, in the short-term nobody knows. For minimal risk, I’d say just sell and lock in the profit.
Comments are subject to spam filtering (you would not believe the amount I get). You posted the same comment multiple times within 30 minutes, and I don’t check that often.
FYI, I’ve contacted Schwab and their corporate actions team is still awaiting the final tender. It seems we are all in the same position here.
So Fidelity has completed the exchange and my 409 shares of MRP are available to sell.. As of now I’m showing a slender profit of about $100 on this whole deal. I’m not sure how to play this. I did start to enter a sell order at market price for Monday’s market open. There was a pop up warning from Fidelity warning that weekend “market price” orders were dangerous because the stock could open “markedly lower” (or markedly higher).
It does seem likely that there could be lots of selling pressure Monday with all the people doing this deal cashing out. Maybe wait a bit for the dust to settle? MRP does pay about a 6% dividend. Decisions, decisions.
I’m down ~$200 on the deal. Bought at $121. Think I will skip these deals in the future. Not sure whether to sell Millrose and take the hit or hope it goes up. Or just keep it in my portfolio. Thoughts?
Schwab rates MRP as underperform and sell. Then there’s a another rating service on their site that rates it a strong buy with a one year target price in the high 30’s and low 40’s. If indeed it does do that and you collected the 6% dividend along the way it would be a nice win. I’m torn as well.
I added a brief update to this post above.
While technically possible if you bought LEN at above $126 or so, I don’t think if you bought at $121 you are at a loss.
I have no idea the future price of MRP shares. I doubt I’ll stick it out long enough to make it to the next ex-dividend date, especially as they have only announced three quarterly dividends ever in their short history.
Does anyone know if Fidelity will eventually offset long and short positions in the same stock? I shorted MRP before receiving the odd-lot tender shares, and now my account shows both a long MRP position and a short MRP position that aren’t offsetting each other. Has anyone been in this situation or experienced it in the past? Will they eventually net out, or do I need to close both legs manually?
You can call them to flatten.
i think this post lower down the overall quality of the blog. I am big fan and suggest Jonathan to take this downs. Not investment nor quick money from bank but simply gambling on stock price in short term
No way, this is a learning experience, just like the many other tender offers from the past. If it was a big win, you wouldn’t be making this comment. Which means it is just based on what actually happened after the bet.
Jonathan did a thorough job of spelling out all the potential risks and ways this deal could go sideways. He was also clear in explaining it was just a way to give yourself a bit of an edge in a deal with a lot of moving parts; not a slam dunk sure money deal by any means.
Lol. Please do the math on if you bought 99 LEN shares whether you paid $115 or $122 and never tendered and what it would be worth based on Friday’s close vs following the lemmings.
Hindsight is 20/20.
the point is you only cared about the spread and not the value of the underlying businesses. and in that case the greatest chance of +ev, would be to have waited to last minute after 1-2 days of evaluation period for vwap and to long len and short mrp. and that is not what u did.
Yes, it is possible to hedge things and make this more of a pure arbitrage play. But hedging has costs. You don’t get to negate the volatility for free. It’s fine to do so, and was mentioned beforehand as a perfectly valid option if you know what you’re doing.
The key is that I simply accept any market volatility during those couple of weeks, up or down. I don’t believe the true intrinsic value of MRP will change over a few weeks time. I did buy LEN shares less than a week before the tender, and I expect to sell the MRP shares within a week or two. I am certainly exposed to some downside, but also upside.
One could have gone long LEN and short MRP. But what if LEN went down and MRP went up? Then not hedging would have resulted in a lot more profit. I’ve had that happen many times in the past, and if I end up a little short this time, that doesn’t change my initial decision-making process. I don’t plan to hedge the next odd-lot tender, either.
the alpha is capturing the discount. it is not betting on short term price volatility to go in your favor. your choice to be rational or not about what the bet is and what is certain.
Honestly, this post explains so much about investing and why it is so difficult for many folks to just accept that they are making a well-considered bet/risk and accepting the results. Even long-term investing still entails risk, and you could lose money, even within a 20-year horizon.
Sold all 409 shares of MRP shortly after the market opened. In spite of having a poor entry point to LENNAR (about 116) it looks like I ended up about $575 in the black on this deal. I’ll take it, it was in my HSA so no tax consequence. Thanks Jonathan for all the guidance!
I sold my MRP shares this morning and ended up with a profit of $790.84 on this deal. I’m happy with that.
At current market rates (close Dec 2, 2025) you would of made $219.34 NOT tendering our shares, regardless of your entry point. This is because the max ratio was reached, which made the odd-lot tender “bonus” only worth about 2-3% vs the anticipated 6-7%. LEN popped 8-10% back a few days and that wiped out any odd-lot tender bonus retail investors could exploit. MRP was up 2% today vs a slightly down day for LEN. We win some and we loose some, but I appreciate Jonathan posting these “deals” 😉 Thanks mymoneyblog
I appreciate you posting these Jonathan. I got in too early ($124) but still eeked out a slight profit. I find these fun and interesting and you make it clear there are no guarantees.