Applying Buffett’s Arbitrage Techniques to InfuSystem Holdings, Inc. (INFU)

So I don’t think financing will be as big of a concern as other investors fear at the moment.

Even if things were to go horribly wrong and the stock drops to $1, I still see a good floor at $1.85. $1 will represent a huge buying opportunity.

What is Important and What is Not

I don’t want to get into the whole conflict of interest argument and lack of fiduciary duty on Morris’ behalf. I admit that he is chairman and is trying to perform a guerrilla attack on shareholders by buying out InfuSystem Holdings, Inc. (NYSEAMEX:INFU) on the cheap.

But, when it comes to this arbitrage, it doesn’t add value to the analysis. It doesn’t change the fact that he wants to take InfuSystem Holdings, Inc. (NYSEAMEX:INFU) private.

However, there are glimmers of hope that this deal works out well.

When I first read the Bloomberg article, I quickly read through it. Going over it again a 2nd and 3rd time, I picked up these two tidbits which I’ll leave you to ponder on.

When Morris called [INFU] shareholders, some said, “Thank God you’re here.” Others were skeptical. How did they know that Morris wouldn’t raid the company for himself? “I was like, ‘I’m 27. I would be ending my career right now if I was going to do that,’

His long-term plan is to “cut my teeth with these small ones that I fix up and sell, and then you can start doing more interesting strategic stuff once you get bigger.” Eventually, he wants to merge companies, change operations, and make the big plays. But to get there, Morris needs more money, and more experience sitting across the table from executives and demanding a seat on a board.

What is your take on this situation?

How much of my bias are you detecting?

Disclosure

Long INFU

Jae Jun is the founder of Old School Value on a mission to provide practical and actionable value investing tools, tutorials and educational material.