Great Minds Think...
Check out this article from JJ Cramer, go to the end. JJC explains why this rumor is so believable: It mentions a specific price (and now you know how to make a believable rumor!!)
Before I post the article, here is my game plan: (1) Wait for the rumor to really juice up the price, say into the mid 30's (2) Write the Dec 40 calls, now priced at about $4 so should be 8-9 by that time. If the rumor turns out to be false, the options you sold will collapse asnd you make a juicy profit. Of the rumor is true, but buyout price is less then $48, options may expire close to worthless. You make out again! If rumor is exactly true, you may still make a few extra bucks over buyout price, or at the worst, lose 1-2 bucks of profit.
Anyway, here is the article:
I just threw in the towel on Qwest (QWST:Nasdaq). Enough
is enough. Can't take it any more. I have been riding this one
high since Jim Seymour first turned me on to it, one of a
half dozen huge winners that Seymour has pointed me
toward in his must-read column. At his prompting, I caught
more than a double and I am thrilled with Seymour.
However, I am not thrilled with Qwest. First of all, I am a
trader. Therefore I am never stupid enough to bid against
myself, as Qwest did. I come up with a price I am willing to
pay and I then don't say, "Hey, let me up my bid" after I have
said that's all I want to pay.
Second, I think this move, as well as the earlier bids, shows
tremendous contempt for the shareholders. Maybe the
Qwest management club thinks this is a private company
with some bozo tagalongs like me that they can shaft all
they want. Fine. But I am voting with my feet. Let someone
else play the role of the bozo tagalong.
Finally -- and this is the main reason why I am throwing in
the towel -- U S West (USW:NYSE) shouldn't even be the
darn object of a takeover bid. It just ain't worth it. Global
Crossing (GBLX:Nasdaq) shouldn't have made the starting
bid in the first place, and Qwest certainly shouldn't have
gotten involved after. I thought these companies were smarter
than this.
Oh, sure, U S West has some DSL lines, blah, blah, blah.
But give me a break. U S West is such a crummy company.
I don't want to own it. I want to beat it. I was hoping Qwest
would let Global blow itself up by doing this merger. Now
Global is getting Qwest to commit financial suicide with its
topper bid.
Maybe if the target were Bell Atlantic (BEL:NYSE), with its
huge mass, we could have something worth hocking a
company to the gills for. That would be a transforming merger
worth betting the company on. But not U S West, a
second-rate Baby Bell from day one. Jeeeshhh!
If I were Global, I would walk away from this fiasco so fast
Jack Grubman's head would spin.
Both bids are lunacy, something dreamed up in order to
generate huge fees and pump up already outsized egos. I
don't know which bid is more valuable, but I am quite sure
that Qwest gets the nod for the more stupid of the two.
What a shame.
Random musings: I see, the new trick with these rumored
acquisitions is not just getting the takeover right. We now get
the price down, too! So Amazon.com (AMZN:Nasdaq) is
allegedly bidding $48 for Beyond.com (BYND:Nasdaq). That
price specificity is simply irresistible to most traders.
I sure hope that BusinessWeek gets into that price
specificity. Can you imagine how many shares K Mart
(KM:NYSE) insiders could have unloaded if BW had simply
said it was going to be a $23 bid from Safeway
(SWY:NYSE) instead of that nebulous bid talk.
Memo to journalists/rumormongers: If analysts can dream up
ridiculous target prices, you can certainly come up with
some decent bid prices.
Garrett Von Waggoner Alert. This fun-loving small-cap
manager loves to hype his tiniest, thinnest names on air.
Today he is on CNBC. Be careful out there.
DocStone |
