agree...so here is what I'm wrestling with short-term in CS!
Looking at the behavior of NETVA and CS I'm developing a theory that only holds until late Sept. to early October. NETVA had been trading at a 60% discount ($5.50) to CS's ($14 5/16) offer on the day of the announcement 6/22, by the 24th that discount had narrowed to 10%, by the 29th the discount expanded again to 24%! Since then the spread has been narrowing to a current 9.4%!
At the beginning of all this I thought CS would bring NETVA up to stay over $7, but I'm beginning to also think CS is dead money until either a buyout or consumation of this deal takes place! Since LU won't be available to do a deal with CS until after consumation when they are able to do pooling of interest deals, and CPQ will probably hold the line for at least another quarter to digest their recent moves, trading in CS itself will probably be flat to negative! Why? Anyone who wants to buy into CS's story will be doing it through NETVA! That is relying heavily on the assumption that this is a done deal come October...which I'm becoming more and more convinced of!
I see only sells in CS to drive us into the $10.5-$12 range until October, and buys in NETVA! Check out the charts and do some detailed analysis! This process accelerated today and yesterday as CS was dropping and NETVA gaining! I added some NETVA at $6.5 and hope for an opportunity to fill out that position below $6.25 before the deal is done. I wanted to dump half my CS position above $12.5 but the stock is not cooperating and I'm getting nervous that we may stay below $12.5 until consumation or buyout!
Considering Mr. Market is heading for the dangerous waters of October/November, I want to have as low a cost basis in CS/NETVA as possible so I'm thinking of exiting my ENTIRE CS position in favor of a NETVA position about half my current CS holdings. Come December, if no buyout has occurred and we have absorbed a market correction, I believe I will be able to re-establish my full load of CS at or below current prices while raising cash levels in this VERY DANGEROUS market! If a buyout occurs before December, then I still participate in the good news through NETVA, albeit at half throttle!
The prospect of CS going into the $10's forced this analysis, but I still think CS's story is compelling and very bullish, and long term non-margined investors have nothing to worry about...CS will NEVER break $10!!!
$weet Dream$
$tar.
Go RMBS go!!! |
