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Non-Tech : BBY -Best Buy
BBY 75.96-0.3%2:04 PM EST
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To: Bruce Russell who wrote (65)12/9/1996 12:09:00 PM
From: DanZ   of 980
 
Bruce: I agree that there will have to be some consolidation in this industry. And BBY seems like a good candidate for a takeover because they have good name recognition, a strong base of stores, a relatively low valuation, and a relatively low market capitalization compared to some of the other electronics retailers. But whether or not a takeover is imminent is anybody's guess and I would never buy a stock based solely this happening. You can get burned very badly if you place a premium on a stock because you think it will be taken over and the takeover doesn't happen. The premium will quickly evaporate and you'll be sitting on a big loss for a long time.

I note with interest the large ask size on BBY at this time (200,000). The stock was acting very well on Friday until about 20 minutes before the close this large sell order showed up. It stopped a momentum building rally dead in its tracks. The order showed up about 30 minutes after the open again today. I don't know what's going on but it seems very odd. One possibility is that somebody wants to buy stock lower and is trying to "talk" the price down. So far that hasn't worked. Or somebody might be short a bunch of Dec 12.5 calls and they want them to finish out of the money. Do you have any guess as to what this is all about? Seems very out of the ordinary for BBY since the bid/ask size rarely goes over 40,000 shares, much less 200,000. I find it strange that a large holder of this stock would show his hand by placing an order to sell that much stock at the asking price. They normally sell a little bit at a time.

Dan
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