Archives for December 2025

Update 12/4/25 (by me). Shares sold; final profit of $890.54. My limit order was triggered yesterday and my shares were sold, closing out my position and finishing this deal. Here are my personal results, you may have done better or worse:

• Bought 99 shares of LEN @$122.29 (11/14) for $12,107.
• Tendered all 99 shares, exchanged for 409.53 shares of MRP (11/20 deadline).
• Received 409 MRP shares and $15.88 cash for the partial share (12/1).
• Sold 409 shares of MRP @$31.74 for $12,981.66 (12/3).

Net profit was $890.54. Total time between purchase and sale was 19 calendar days, working out to an internal rate of return (IRR) of 290.98%. (At 5% APY, my interest over 23 days on $12,107 would have been about $32.) I usually try to buy within a week of the tender deadline, and sell within a week of receiving the final shares, and it takes roughly a week to exchange so the total time is usually less than three weeks. The absolute ROI is 891/12107 = 7.4%.

Update 11/29/25 (by me). Check for exchanged shares. The final results have been released. My new MRP shares showed up after market close of Friday 11/28 in my Fidelity account, and probably in other brokerage accounts around this time as well. See original post below for past details, although the opportunity has passed.

The final exchange ratio was 1 share LEN to 4.1367 shares of MRP. The deal was oversubscribed, with a final proration factor of ~8.6% of shares tendered. However, those with “odd lots” of 99 shares or less were not subject to proration.

If treated as a short-term workout, your profit will depend on both your entry and exit price. This tender was drawn out due to the government shutdown, so your entry price could have varied widely, as low as around $115 per share. Mine wasn’t all that great at $122.29 x 99 shares = $12,107.

You would have gotten 409.53 shares of MRP, so 409 shares of MRP and a bit of cash later. At the Friday 11/28 close price of $30.46, 409 shares would be worth ~$12,458 for a rough profit of about ~$350 plus any fractional share payout later.

However, the actual price at which I will sell MRP is unknown. I don’t know how the market will open on Monday. I will note that 778,625 shares of LEN were tendered by odd-lot holders, which would now be about 3.2 million shares of MRP. Now, the 90-day average daily trading volume for MRP stock is only ~2 million shares. So if you think that all the odd-lot holders will want to sell, that might put some pressure on the stock for a while. I expect to watch things for a bit, but sell within a couple of weeks. Might put in a limit order.

If you did not hedge this bet (and thus losing some of the edge), then it is/was just a bet with a positive edge that you can still lose money on. Imagine you had to be “in the market” for a couple of weeks, but with a 6% buffer. If the market goes down worse than 6% during that time, you lose some money. Otherwise, you are ahead. For some, that is still too much risk. For others, it’s a gamble with an edge and they’ll take it using a appropriately sized portion of their bankroll. Personally, I would take that bet repeatedly. There’s a lot to be learned about investing with this little experiment. Again, please consider all the risks outlined in the original guest post below.

Update 11/14/25 (by me). Things moving forward. Things appear to have settled down, as this exchange offer had to be extended a few times due to the government shutdown (which includes the SEC). As it stands now, the expiration date is 12:00 midnight ET on November 21, 2025. Each broker will have their own cutoff time to participate in the offer, my Fidelity account shows a cutoff date of 11/20/2025 7:00 PM ET (although I’d call in before market close that day). I had to call in to tender my shares this time.

Lennar’s motivation to complete this exchange appears to remain strong, so my expectation is that it will go through. I make this update now because it means you still have time to do your own research (see risks explained in the guest post below), decide whether to buy 99 shares, and tender those shares. The site Envisionreports.com/lennarexchange remains a good place to see the updated live stats on this offer.

Original post 10/17/25:

From time to time, I participate in certain stock exchange offers which include a special provision for smaller investors, called “odd lot tenders”. You can find more background information on these short-term “arbitrage” plays in the last two offers that I joined: Cummins/Atmus Filtration and Johnson & Johnson/Kenvue.

Recently, Lennar (primarily a homebuilder) announced such an exchange offer as they try to complete their spinoff of Millrose Properties (an REIT, primarily a land bank). This time, Rich Howe of StockSpinoffInvesting.com – who has a lot more experience with these deals than me – has generously agreed to share his summary and analysis of the deal. Please enjoy the following guest post:

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Buy Lennar – Exchange Offer – Special Situation

October 15, 2025
LEN: $122.21
Market Cap: $30BN
Recommendation: Buy 99 shares of LEN, Exchange for shares of MRP
Expected Profit: $772 / 6.4%

Summary

Lennar (LEN) announced an exchange offer on October 10, 2025 whereby investors can exchange their LEN shares for shares of Millrose Properties (MRP), Lennar’s land bank spin-off. To incentivize the exchange, LEN investors will receive $106.43 of value in MRP shares for every $100 of value in LEN shares. I expect the exchange offer to be oversubscribed. However, there is an odd lot provision such that any LEN shareholders with 99 shares or less (odd lot provision) will not be prorated. Thus, there is an opportunity to buy 99 shares of LEN and exchange them for shares of MRP. This should result in a profit of ~6.4% / ~$757 (at current prices) in less than a month. The profit is not guaranteed (of course!) but is low risk, in my opinion. To participate in this exchange offer, you must contact your broker (you may be able to participate in the exchange offer online). It will not happen automatically.

Deadline: The exchange offer will expire on November 7, 2025. So this is time sensitive. Brokers typically require investors to give them notice about the exchange well before the official deadline. Schwab’s deadline will likely be November 5, 2025, but it would be prudent to buy on November 3, 2025 at the latest as it takes two days for shares to settle. I’m planning to buy 99 shares of LEN shares on or before November 3rd and then immediately call Schwab and ask to participate in the exchange offer. Other brokers (Fidelity, Interactive Brokers, etc.) have their own internal deadlines which are typically after the Schwab deadline.

Additional Details

Lennar (LEN) spun-off ~80% of Millrose Properties (MRP), its land bank, in February 2025.

It retained ~20% of the business.

On October 10, 2025, Lennar formally announced that it would spin off its remaining ~20% stake in Millrose Properties via an exchange offer.

I’ve highlighted key terms but you can visit the transaction’s live website with additional details.

For every $100 shares of LEN that you own, you will receive $106.38 of MRP shares.

Since this exchange represents an attractive return in a short period of time, I expect the offering to be oversubscribed (similar to previous exchange offers that I’ve covered).

However, there is an odd lot provision such that if you own fewer than 100 shares, you will not prorated.

Here is the exchange offer filing and a website which tracks the exchange offer indicative exchange ratio.

This offering is very similar to the many other split off/exchange offers that we’ve participated in.

Examples:

• CMI/ATMU Exchange – Unhedged trade worked well.
• JNJ/KVUE Exchange – Unhedged trade worked well (Iag shouldn’t have held onto KVUE shares).
• LLY/ELAN Exchange – Unhedged trade worked well.
• DHR/NVST Exchange – Unhedged trade worked well.
• ECL/CHX Exchange – Unhedged trade worked well.
• DD/IFF Exchange – Unhedged trade worked well.
• MMM/NEOG Exchange – Unhedged trade did not work.

How to Execute the Trade

LEN is currently trading at $122.21 per share.
MRP is currently trading at $31.96.
Here’s how the math works at current price levels.

Step 1
Buy 99 shares of LEN for $122.21 per share. Total cost of $12,099.

Step 2
Per the exchange offer, shareholders who elect to exchange their LEN shares will receive MRP shares at a 6% discount or at a price of $30.04 ($31.96 x (1-6%)). The MRP price hasn’t been finalized yet. But I’m using the current price plus the discount as I think that’s the best way to approximate what the actual price will be. The actual price will be determined by a formula laid out here.

$12,099 / $30.04 = 402.72 shares of MRP

402.72 shares of LEN / 99 shares of MRP = 4.07. 4.07 is lower than the max exchange ratio of 4.1367. If the ratio were higher than 4.1367, the number of MRP shares would be maxed out at 409 (4.1367 * 99).

Step 3
Sell MRP shares that are received once the exchange goes through. It usually takes Schwab about a week to process the exchange offer. I expect to receive my MRP shares by November 14, 2025 or shortly thereafter.

At current prices, the trade is expected to generate a profit of $772.

In terms of timing, the exchange offer expires on November 7, 2025 (unless LEN changes it), and so I recommend that you buy LEN shares no later than November 3rd to ensure you make the deadline (it takes two trading days for your purchase to settle and brokers internal deadlines are usually 2 days prior to the official company deadline). After you purchase shares, call your broker and ask them to tender your shares. This is important. Your participation in the exchange isn’t automatic.

I created a spreadsheet to track the profitability of this trade. Here is a screenshot of it:

You can access the spreadsheet here: LEN / MRP Exchange Offer Spreadsheet
(to edit, make a copy of the spreadsheet and plug in your own assumptions)

Thoughts on Millrose Properties?

Millrose was created when Lennar contributed ~$5.5 billion in undeveloped, partially developed, and some fully developed land assets, along with up to $1 billion in cash, to Millrose. Millrose operates as an independent entity, acquiring and developing land to deliver finished homesites under land option contracts. At the time of the spin-off, it only served Lennar but it plans to engage with other homebuilders as well.
Lennar pays Millrose option fees for the right to buy land on Millrose’s balance sheet.

This strategic move is part of Lennar’s ongoing shift toward an asset-light operating model, aiming to reduce financial risk and enhance returns by minimizing direct land ownership.

I’m happy to own Millrose Properties at a 6% discount, but don’t want to own the stock for the long term as I believe its ability to grow and generate upside is limited given Lennar’s right to purchase its land.

What are the risks?

LEN Sells Off
If you buy LEN, and it sells off prior to the exchange, you could lose money. I’m not particularly worried about this risk, as investors will likely continue to bid LEN shares up to take advantage of the share exchange.

A major sell off could happen if some random negative news hits LEN (for instance negative news in a lawsuit). This is unlikely but did happen during the MMM/NEOG exchange offer. JNJ also had a negative court ruling during its exchange offer, but the exchange was still profitable.

If LEN does sell off, it would have to sell off by ~6.4% for you to lose money. To minimize risk, you could also short out the MRP exposure.

I looked back at the performance of the parent during similar transactions and found that it usually performs well (average: +2.2%; median: +3.8%)

The Exchange Is Canceled or the Odd Lot Provision is Removed
Lennar wants to distribute its ~20% stake in Millrose Properties and this is an efficient way to do so. I don’t expect it to be canceled, but it’s possible.
The odd lot provision could be removed, however, this has never happened for split off transactions (that I’m aware of). Nonetheless, it could happen!

Millrose Properties (MRP) Stock is Weak After the Share Exchange Closes
If the share exchange closes and investors who’ve exchanged their LEN shares for MRP shares make 6.4%, but then MRP shares immediately depreciate by more than 6.4%, this trade will lose money. In other words, this trade can lose money even though the initial math looks favorable.

While this risk is valid, I’m comfortable participating in this trade and believe it represents an attractive risk/reward.

Disclosure
Rich Howe, owner of Stock Spin-off Investing (“SSOI”), doesn’t own LEN shares but plans to buy them. All expressions of opinion are subject to change without notice. This article is provided for informational purposes. We do not warrant the completeness or accuracy of this content. Please do your own due diligence and consult with an investment adviser before buying or selling any stock mentioned on www.stockspinoffinvesting.com.