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Update 11/14/25 (by me, not Rich). 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.

I haven’t seen any indication that Lennar’s motivation to complete this exchange has diminished, 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, decide whether to buy 99 shares, and tender those shares. The site Envisionreports.com/lennarexchange is 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.

My last post on treating your kids’ 529 plans as the equivalent of Roth IRAs had me thinking again about asset allocation.

• If you plan on spending your 529 assets when your child is age 18-21, then your time horizon starts to get very short, very quickly.
• If instead you plan on your 529 assets to be eventually rolled over into a Roth IRA, then your time horizon is several decades! In that case, why not 100% equities and let it ride?

If you use the Rule of 72 and assume very roughly that it will double every 10 years, then after 60 years you will have 64 times (!) what you put in initially. Of course with inflation that won’t be as impressive, but still.

Most 529 owners use the age-based or target-enrollment portfolios from their plan provider. Some only offer one flavor, while others split it into “conservative, moderate, and aggressive” versions. Morningstar analyzed them all in their 529 landscape report and found that they start on average with ~90% stocks and “glide” down to ~16% stocks when the beneficiary turns age 18. Up top is their graphic of average glide path.

I’ve always found this to be a pretty fast descent. If you look carefully, that means that 20% of the stocks you bought when your kid was age 1 might be sold by the time they are age 6 and 50% sold by age 11. That’s not a very long holding period.

Instead, I decided to start out 100% stocks with the idea that I wanted a long 15 year period of holding stocks for any wobbles to even out, and the plan is to reduce the stock exposure rapidly around high school (10% a year stocks to bonds over the last 5 years or so). I’ve been very fortunate with the high overall stock returns for the last 10+ years. Perhaps I’m pushing my luck now and should cut back sooner to be more in line with these institutionally-approved glide paths. But maybe if stocks tank right before age 18, I’ll just leave some in for a future Roth IRA?

Morningstar also recently updated their Top 5 plans and they mention that Utah (the one I use) remains the only top option that offers a custom glide path option where you can plan it out once and it will follow it for you. For the rest, you’d have to manually make the changes as most plan allow you to change the asset allocation at least once a year.

E*Trade (Morgan Stanley Private Bank) is running promotions for new customers on both their savings and checking accounts:

• Premium Savings up to $1,000 deposit bonus + 3.75% APY
• Max-Rate Checking $300 bonus + up to 2.00% APY

Savings promo details.

• Offer is valid for new E*TRADE from Morgan Stanley clients who open a Premium Savings Account by 2/28/2026 with a deposit of $25,000+ of qualifying new money within the first 30 days after account opening. See tiers below. Use promo code SAVE100.
• Maintain an average daily balance in your enrolled Premium Savings Account that meets the Minimum Maintenance Balance of your Deposit Tier. The average daily balance calculation will begin from Day thirty (30) of account opening and will end forty-five (45) days following (“Maintenance Period”).
• After the requirements are satisfied, E*TRADE will deposit the bonus within thirty (30) days following the end of the Maintenance Period.

If your deposit meets the minimum of a tier exactly ($25k, $50k, $75k, $100k) then it works out to a 1% bonus ($250 on $25k, etc). If let’s say you hold for 60 days for some wiggle room, that works out to a 6% bonus on an annualized basis. Add on the current 3.75% APY on the Premium Savings account for a total of 9.75% APY. Not bad.

Checking promo details.

• Open one new Checking or Max-Rate Checking Account from Morgan Stanley Private Bank by the end of the offer period (currently 12/31/25). You must apply promo code CHECKING25 at the time of account opening. No minimum initial deposit is required to open an account. However, account must be funded within 30 days to remain open. You are not eligible if you have or had owned or co-owned (joint) a Checking or Max-Rate Checking Account within the last 12 months from when you enroll in this offer.
• Set up and receive at least two Direct Deposits each of $1,500 or more to your Checking or Max-Rate Checking Account within 90 days from account opening.
• Your bonus should arrive around 120 days from account opening.

As of 11/10/2025, Max-Rate Checking Account pays 2.00% APY. You must maintain a $5,000 average monthly balance, otherwise there is a $15 monthly fee. The basic Checking Account only pays 0.05% APY (basically nothing), but has no minimum balance.

A new automated investing app called FutureMoney is advertising something called the Junior Roth IRATM with some pretty awesome “key benefits”, according to their site:

– Tax-free growth potential
– No earned income required to make contributions
– Favorable FAFSA impact when funded by grandparents
– Optimized for long-term generational wealth building
– Within certain limits, can be used for education, a first home, or retirement.

Since it doesn’t required earned income, it’s not an official Roth IRA for kids (aka Custodial Roth IRA). Somehow, is this even better?!

A Custodial Roth IRA has maximum annual contribution room of $7,000 per year. By comparison, you can invest up to $35,000 for your child is a minor with a Junior Roth IRA over its lifetime, with no annual limit.

After a bit of poking around on their site, I realized that under the hood it’s just a 529 plan with the expectation that when the option is available, they will roll over the 529 plans assets into a Roth IRA account. I didn’t know you could advertise the combined benefits for two completely different things (529 and Roth IRA), make up a name for this thing that doesn’t actually exist, and then trademark it?

There is so much obfuscation on this site!

What is a Junior Roth IRA?
The Junior Roth IRA, exclusively offered by FutureMoney, allows you to invest up to $35,000 while your child is under 18 and grow that money tax free into their retirement, based on a 529 plan to Roth IRA rollover.

It’s a 529 plan. Full stop.

Therefore, to see the limitations of this method, simply look up any article about the new option for rolling over unused 529 funds into the beneficiary’s Roth IRA without a tax penalty. Here are important limitations to consider, per the Secure 2.0 Act of 2022.

• The originating 529 account must have been maintained for the Designated Beneficiary for at least 15 years.
• The transferred amount must come from contributions made to the 529 account at least five years prior to the 529-to-Roth IRA transfer date.
• The target Roth IRA must be established in the name of the Designated Beneficiary of the 529 account.
• The amount transferred to the target Roth IRA is limited to the annual Roth IRA contribution limit. It is not in excess of the normal contribution limit. This means your child does eventually need to have earned income equal to the amount to be rolled over into the Roth IRA.
• The aggregate amount (total over multiple years) transferred from a 529 account to a Roth IRA may not exceed $35,000 per individual.

I would add that nobody knows what will happen in the “Secure 5.0 act of 2035”. The Roth IRA window might be narrowed, closed, or even opened further. I do think closing it will hard after it’s already been opened, but 15 years can be a long time.

As usual with 529 plans, you can make some pretty impressive claims by combining the power of compounding and a long period of time.

“If a parent invests just $10 a week from their child’s birth to age 18 and then leaves it to grow for 50 years, their child could have a $1 million nest egg, assuming 8% compounding annual returns,” states Dave Fortin, CFA, co-founder of FutureMoney.

Even if it is a 529 plan with a lot of limitations, let’s consider if viewing it as a Roth IRA is actually a good idea. Let’s be honest, this is for relatively rich families that are able to help their kids/grandkids even beyond the enormous, scary cost of a college and post-graduate education. $10 a week ain’t going to do much when college is coming up fast! As they say, the richer you are, the longer your financial time horizon becomes.

For such financially well-off families, I could see this as useful for the years when your child is 16-25. Even though I am a financial nerd now, I didn’t really become financially “aware” until I was 21 years old and didn’t make my first Roth IRA contribution until I was 21 years old. However, I started having “earned income” at age 16 or so. So it may be useful to contribute the money into a Roth IRA at those younger ages (maybe a “parent match”?) when there is a window where they may be earning some money from work, but not enough to be able to defer that money into a Roth IRA on their own.

But again, you can do this with any 529 plan, and the good 529 plans out there already have some low-cost, diversified portfolio options. The Utah plan I picked lets you make a customized glide path using Vanguard and DFA funds. You don’t need this “Junior Roth IRA”.