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Strategies & Market Trends : Value Investing
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To: Madharry who wrote (39709)10/17/2010 10:24:42 AM
From: MCsweet  Read Replies (1) of 78702
 
LIA follow up,

Assuming the deal gets approved, I think you will earn some gains after it gets approved as the uncertainty premium is taken out. Then I think you earn a little more risk premium when the shares finally convert. (I think folks underestimate the value of the converts.)

Finally, I think Prisa stock could appreciate as the deal arbs get worked out and real buyers come in. So I have positive expectations for holding the shares over the three different stages of the investment. However, the risks ramp up at each stage and particularly at the last stage.

I have a large position now, but would be chopping it down as the deal progresses.

It is kind of like TTT, which I thought was a great event-driven opportunity, but where I have started to take money off of the table as the risk/reward gets less attractive.
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