Yellow Pages – Float shrinks even further

Today on SEDAR, Empyrean Capital Partners disclosed a purchase of shares in Yellow Pages (TSX: Y) and their holdings are now 5.64 million shares, which is up approximately 677,000 shares from their previous disclosure (which was nearly two years ago).

Combined with the 63,750 shares that Yellow has repurchased in the month of August, this means the public float not held by the 10% owners is approximately 6.39 million shares, or about 23% of the shares outstanding.

The massive short position that was in the company last year has nearly exited the position – short interest is about 18,500 shares. This is unfortunate, as I rather enjoyed receiving an extra 10% yield on my shares as they were periodically being lent out for short sellers.

With the amount of cash flow they are able to generate, they will be paying the entirety of their convertible debentures (TSX: YPG.DB) on May 31, 2021, if the stock price is not above the conversion price ($19.04/share) at that time. After paying off the debt (or having it converted), I would view it more probable than not that the dividend and/or buybacks will increase significantly from the current quarterly 11 cents per share. I’m quite surprised the rest of the float hasn’t been taken private – I’d guess a lowball offer around $15-16 is incoming. When you consider the company has generated more than $4/share in cash in the past four quarters, this actually seems low.