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Biotech / Medical : Biotech Stock Picking for Charity - 2006
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To: BulbaMan who wrote (325)2/17/2006 6:06:57 PM
From: quidditch  Read Replies (1) of 592
 
"Why not just stick with the closing price and no reinvestment." That seems to me to be unduly restrictive and unrealistic.

If the contest is intended to mimic the prowess, or not, of the contestants in a "real world" setting, the lucky (shrewd) owner of stock in a company that has been taken over would, in the real world, re-assess the allocation of the investment dollars returned to him/her as a consequence of the business combination. He/she might sit with the appreciation in cash, but just as likely might put it to work in companies of his/her choosing.

Since it might be argued that deployment of the cash at the time of the takeover would confer an unfair advantage because of newsflow that other contestants can not adjust to, deployment of the cash outside the original picks, or to change the proportion of the original picks, would not be within the spirit of the rules.

I think Michael Murphy had it right, and that Tuck should have the option of sticking with the gains as of the transaction closing date or redeploying the cash, allocating it pro rata to the remaining picks. To avoid the appearance of cherry picking, the rule might be that the choice has to be made within 10 days of the announced transaction date. Note that this is not necessarily a slam dunk either way, as deals can and do fall apart.

just my pennies
quid
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