Some very interesting views on CDNW / NTKI merger. . .
Not mine though. . .I have expressed many opinions, but these views take on a unique perspective. . . sent me by one of our readers. . .pretty darn good insight, in my opinion.
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Rande,
What I saw today [yesterday, Tuesday Mar. 9] in CDNW and NTKI was *some* of the shorts leaving for greener pastures, and, TOTALLY unsubstantiated rumors that Seagrams (VO) is going to make a bid for the combined company. Add to this the ability of NTKI to "spin-off" their TERRIBLE (intense money-draining) "label" idea into a joint venture with Warlock Records.
There was a lot of fear that NTKI would have to EAT their "label" (at a substantial write-off expense). This seems alleviated by the Warlock deal.
I still see potential downside when CDNW presents at Paine Webber next week (only because it is prior to Wednesday, so, CDNW may be put in the position of seeming to "avoid" difficult questions); but. it looks like the fog is potentially starting to lift.
Also, remember, the deal is 0.83 CDNW to 1 NTKI: so, there is still a premium in NTKI. These two have been moving in lock-step for six months, so any new entrants to these two (prior to Wed. 3/17) should probably enter on the NTKI side.
There is still HEAVY short interest (in BOTH CDNW & NTKI) that needs to cover before 3/17 (if you don't see at least 35 - 50% covering by Friday's open, I would think we are in for a shorting of the combination company also)...could see a pre-mature run this week, followed by a pull-back on Friday and Monday (maybe also part of Tuesday), followed by the actual run on Wednesday, when the votes clear the merger, thus, ending the "quiet period." The REAL pop in these companies/this company will come when the press releases start flowing and the rumors of take-over begin to circulate in earnest. IMO, both these events will occur prior to next Friday (3/19) -- beginning the HUGE run. [I hope the run is quick, because I currently have almost $200k "dead" money (based on today's close) in NTKI, and I am missing other moves that I would really rather be on with this cash.]
BTW: I loved your BB post on the "FISHING" thread! If only everyone
had the interest of others closer to the interest of themselves in this "game" we call The Market.
XXX
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Rande,
I cannot believe how STUPID I am...the risk arbitragers have been shorting CDNW and using the money to go long on NTKI...this brought "stupid" shorts into NTKI (figuring that if CDNW was a good short by the pros, then NTKI would be a good short for them, it also made the RAs' money from shorting CDNW go that much further towards long positions in NTKI -- that is why there are so few [323] NTKI holders-of-record for the proxy). Now that the premium on NTKI is gone, the pros are starting (or finishing) their covers on CDNW -- thus, they are holding the price down until they are fully out. Then, watch out above!
Duh!!! (Watch the short discrepancy between CDNW and NTKI -- when CDNW % short goes below NTKI % short, this "inning" of the merger game is over and there should then be no real "brakes" -- just idiots looking to cover NTKI.) Sorry I missed this earlier..
XXX |
