>I said the only downside of owning WIND is that it might get
>bought out by a company like Microsoft. What, in your opinion,
>is WIND's chances of thwarting (management only owns 38% of
>WIND), such an unfriendly take over?
>Or, will the management cash out if the offer is right!
You are truly understanding WIND's potential when you describe possible takeovers as a "downside risk". Certainly you realize that many investors scramble to find so-called takeover candidates as great short-term investments.
Nevertheless, you are absolutely correct. I do consider it a downside risk, not for loosing money, but for not continuing indefinitely making a handsome return. I remember Peter Lynch once lamented about having to cash Taco Bell in for a handsome profit when Pepsi bought the franchise. His only consolation was an overnight doubling of the investment. Poor guy.
What will WIND management do if faced with an enticing takeover bid? I have no idea, except that it will depend completely on the circumstances and the amount offered. I can envision some possibilities that might be greeted positively, due to an anticipated acceleration of the business plan with a larger, relevant partner. I can also envision a friendly defensive takeover if something unfavorable happened like INTS being acquired by MSFT. But in general, I suspect it would be difficult to talk management into backing a middling takeover attempt because they no doubt see even more opportunities than do we, and they obviously will not fritter away their sizable stakes in our company.
The nice thing is that fear of a takeover is not a reason to avoid investing in any company, for there is no possibility of loosing money if a takeover occurs. For that reason, in all seriousness, you and I shouldn't label it a "downside risk".
Allen |
