In short: Alluvial Fund: a break-up already approved and awaiting only a regulator. "Shareholders approved the sale of its technology assets and the merger of its bank operations with CommerceOne Financial. All that remains is government approval, expected imminently." Despite the shares acting well they "still trade at a large discount to pro forma tangible book value," and the post-deal capital plan is the second leg: "if the bank continues to trade below tangible book value after the deal is completed, I expect they will not hesitate to implement share buybacks." Sizing of the prize: "upside of 50-70% in the next few years, net of the large distribution shareholders will receive when the deal is completed."
Green Dot is being taken apart deliberately: shareholders have approved selling its technology operations and merging its bank with CommerceOne Financial. Only a regulatory sign-off remains, which Alluvial expects shortly.
Shareholders will receive a large cash distribution when the deal closes, and are left holding shares in the combined bank. Even after a decent run, those shares still trade below the accounting value of the bank's assets — and Alluvial's view is that the people who will run it are capable operators who would buy back stock rather than tolerate that discount. Adding the payout to the residual value, they see 50-70% upside over a few years.
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