Ann: Capital management and future direction prop, page-5

re: Ann: Capital management and future direct... Relaxan

Well done overall on this one. You were also spot on with the capital return figure of $1.4-$1.5. After running the numbers I think both options are not too bad and every investor has to consider opportunity cost of invested capital so I appreciate your preference for the buyback. The buyback definitely will allow you to exit a larger portion of your holding even if everyone else tenders.

Any thoughts on discount to NTA post buyback? If it remains at current levels (or reduces as uncertainty decreases) and a large percentage of shares are tendered than it may be beneficial to hold more shares and sell after the buyback. If we lost the Tyco dispute though I would tender everything I had. Hopefully we'll hear about this soon.

Have not heard much about HCI except that they have been successful and are value investors. I would rather exit and watch what they do before I got back in.

As for ideas for the cash you're likely to get have a look at IPE and RCU. Both have their specific issues to deal with but trade at significant discounts to net assets.

Rick