Less Than 10 Percent Of The Eligible Series B Preferred Shares Were Tendered -- At $8.60 -- Why?

This evening, Mattersight announced the results of the partial tender offer it ran for the 7% Series B Preferred. That tender expired last Friday evening -- not with a bang, but with a whimper. Fewer than 20,000 of the 111,000 or so eligible Series B Preferred Shares were tendered, according to Mattersight's SEC-filed report, closing out its previously-filed Schedule TO.

The under 20,000 shares of Series B tendered, in turn, represents just about 1 percent of all the still-outstanding Series B, which converts one-for-one into common, now. [I'll be back tomorrow, with some thoughts on whether this earler surmise of mine -- played any part in that.]

To be fair -- at least at first blush -- I think the anemic response had far more to do with the notion (if you believe the Mattersight common is stable at this price level) that holding the Series B is tantamount to earning a 7% running dividend on the Mattersight common, as Series B converts one-for-one into the common at any time, and it is even entitled to much the same voting rights, generally, as the common.

No, I think at least some traders on last Thursday (after 10 AM -- see the chart here), woke up to the idea that since Mattersight common has never paid a dime of dividends, one could hold/acquire the Series B, and clip 7% -- as a pretty decent return.

Or perhaps in a less-charitable vein, most savvy B holders realized that Mattersight was underpricing them. If the common was trading above $8.71 last week with no dividend (as it was) -- why should the Series B, with a 7% coupon -- be worht less than the common, if tendered? It shouldn't.

It could be argued that Mattersight was looking to grab some of the B back "on the cheap," here. Only a few took the suckers' bet, it seems.

As I say -- more after I've been able to sleep on it.