(Tony, Gus, JDN, etc.) Here's a question for the thread...
Back to McData/EMC-
How does one value a share of EMC right now? Let me explain.
If I hold, say, 100 shares of EMC, and I get (approximately) 3.75 shares of McData (at distribution) for each 100 shares of EMC.....is the current value of my EMC holdings, 100EMC + 3.75McData? That would not seem logical (of course), given, if I sell EMC right now....I don't get anything for (any future distribution) from McData shares...
Now, if these 100 shares of EMC are only worth 100shares....then, McData is not worth anything at this point....and will ONLY be worth something, IF and WHEN the shares are distributed.....following this logic (or stream of thought <G>) further.....perhaps,if the distribution of McData shares are not (yet) recognized in the price in EMC shares....in other words, what if..... on the day it becomes clear that McData shares will DEFINATIVELY be distributed, EMC share price DROPS (to reflect the spinoff)- instead of being static? And, let's suppose, that EMC's share price drops exactlyu to reflect (new) EMC + McData= previous EMC price....
(Hope this "discussion" is not too confusing)..
Couldn't the spinoff actually yield NOTHING in terms of (additional) recognized value? Perhaps EMC's CURRENT share price already reflects any potential spinoff from McData (and has been discounted already)....Or maybe, EMC's current stock price recognizes some sort of discount (but not full) that McData shares will never be spun-off?
Most of the discussion on the thread seems to assume that our current EMC will receive the "bonus" of McData? Of course, spinoff/distributions usually yield such...but I doubt that is always the case....
So, I am left with the conclusion that we have no idea, really, if our current EMC shares will EVER = EMC + McData spinoff/distributed shares.....or how much "gift" we will receive......UNTIL it actually happens....(because we really can't know if the market has already "priced" this in or not)...
Anyone get this? Am I kooky? (Don't answer that..)..as Styx would say, "too much time on my hands"... |
