Sell Bud now or wait

gary m · 07-24-2008, 06:19 PM

Would you sell Bud at 67 or wait for the 70 takeover?

yakers · 07-24-2008, 08:50 PM

Buy & drink Bud.

Zathras · 07-24-2008, 08:53 PM

Unless you are impatient, I see no reason not to hold for the full price.
That is about a 4% gain in, what they expect, to be 6 months. Sign me up

CyclingInvestor · 07-24-2008, 11:52 PM

I always sell once both parties agree on the price. Upside is very limited, downside is not - mergers can fall apart for many reasons.

haha · 07-25-2008, 01:08 AM

Quote:

Originally Posted by CyclingInvestor

I always sell once both parties agree on the price. Upside is very limited, downside is not - mergers can fall apart for many reasons.

I am with Cycling Investor on this. This is a game for professionals who are plugged into rumor and information networks. I congratulate myself, sell, and find a new use for the money.

Ha

brewer12345 · 07-25-2008, 07:54 AM

I usually decide what to do based on the size of the discount and my estimate of the likelihood of the deal going through. Anything with a financial buyer (LBOs) I usually fling out the window in short order before they (or their lenders) change their minds. Deals where the buyer is someone with a strategic reason to do it I will usually hang on until the spread is tiny (a couple percent) or even go all the way to completion. So this is about how comfy you are with the risk and how much you are being compensated for taking it.

If you are uncomfy with the risk, sell and go find something else to buy. Taking such a profit is nothing to be unhappy about.

As a side note, there are specialist funds that do nothing but earn the spread between the merger price and the market price. They spread the risk over a lot of different deals and usually make steady, modest profits without a ton of volatility. Sometimes known in the trade as "picking up nickels in front of an oncoming bulldozer." If you are curious about these things, MERFX is one such fund that is open to retail investors, although this is by no means a recommendation either way on this fund or strategy.

Westernskies · 07-25-2008, 08:42 AM

Can anyone cite examples of a mega-merger where stock prices were still up a year or two later? Maybe they are out there, but I can't readily recall any. It seems like the challenges of merging disparate business cultures usuallly consume them, and affects earnings for years to come. Or is this too much of a generalization?

I would think the stock price at the time of or just after the merger is completed would be the highest you will probably see for a while- Like hiring a new employee-the day you interview him is usually the best he/she is ever going to look. Then the newness wears off..

Maybe some of you older and wiser investor types would care to pontificate?

FinanceDude · 07-25-2008, 09:28 AM

I took my 37% and ran.........I am not that greedy.

I think Baron Rothschild said it best: "Fortunes are made by selling too soon"........

Zathras · 07-25-2008, 09:59 AM

Quote:

Originally Posted by bigwonderfulwyoming

Can anyone cite examples of a mega-merger where stock prices were still up a year or two later? Maybe they are out there, but I can't readily recall any. It seems like the challenges of merger disparate business cultures usuallly consume them, and affects earnings for years to come. Or is this too much of a generalization?

I would think the stock price at the time of or just after the merger is completed would be the highest you will probably see for a while- Like hiring a new employee-the day you interview him is usually the best he/she is ever going to look. Then the newness wears off..

Maybe some of you older and wiser investor types would care to pontificate?

From what I understand, this buyout is a cash buyout. So IF the deal goes through anyone that owns BUD will receive $70/share.

The buyout makes sense for inBev, is friendly and a very good price.
I see very little chances of this falling apart. However, in my case, I also own BUD for the dividend. So even if it doesn't go through my income stream is unaffected (unless they also cut the dividend).
Also, since this is stock is zero basis for me, the capital gains would be substantial (essentially I would come out even).

I certainly do see better now why selling would make sense depending upon your situation. Just not for me

07-24-2008, 06:19 PM	#1
gary m Confused about dryer sheets Join Date: Apr 2008 Posts: 2	Sell Bud now or wait Would you sell Bud at 67 or wait for the 70 takeover?

07-24-2008, 08:50 PM	#2
yakers Thinks s/he gets paid by the post Join Date: Jul 2003 Posts: 1,622	Buy & drink Bud. __________________ A slave is someone who waits for someone else to free them

07-24-2008, 08:53 PM	#3
Zathras Full time employment: Posting here. Join Date: Jun 2006 Posts: 665	Unless you are impatient, I see no reason not to hold for the full price. That is about a 4% gain in, what they expect, to be 6 months. Sign me up __________________ "We do not inherit the earth from our ancestors, we borrow it from our children. (Ancient Indian Proverb)"

07-24-2008, 11:52 PM	#4
CyclingInvestor Full time employment: Posting here. Join Date: Jul 2005 Location: Los Angeles area Posts: 810	I always sell once both parties agree on the price. Upside is very limited, downside is not - mergers can fall apart for many reasons. __________________ learn, work, save, invest, fire

07-25-2008, 07:54 AM	#6
brewer12345 Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Mar 2003 Posts: 9,365	I usually decide what to do based on the size of the discount and my estimate of the likelihood of the deal going through. Anything with a financial buyer (LBOs) I usually fling out the window in short order before they (or their lenders) change their minds. Deals where the buyer is someone with a strategic reason to do it I will usually hang on until the spread is tiny (a couple percent) or even go all the way to completion. So this is about how comfy you are with the risk and how much you are being compensated for taking it. If you are uncomfy with the risk, sell and go find something else to buy. Taking such a profit is nothing to be unhappy about. As a side note, there are specialist funds that do nothing but earn the spread between the merger price and the market price. They spread the risk over a lot of different deals and usually make steady, modest profits without a ton of volatility. Sometimes known in the trade as "picking up nickels in front of an oncoming bulldozer." If you are curious about these things, MERFX is one such fund that is open to retail investors, although this is by no means a recommendation either way on this fund or strategy. __________________ “When you realize that you are one of the rare few who observe moral principles in their relationships with others, there is a temptation to sink into amorality, not out of conviction or pleasure but simply to avoid further pain, because there is no greater suffering than being an angel in hell, whereas a devil feels at home wherever he goes.” – Martin Page, How I Became Stupid

07-25-2008, 08:42 AM	#7
Westernskies Full time employment: Posting here. Join Date: May 2008 Posts: 950	Can anyone cite examples of a mega-merger where stock prices were still up a year or two later? Maybe they are out there, but I can't readily recall any. It seems like the challenges of merging disparate business cultures usuallly consume them, and affects earnings for years to come. Or is this too much of a generalization? I would think the stock price at the time of or just after the merger is completed would be the highest you will probably see for a while- Like hiring a new employee-the day you interview him is usually the best he/she is ever going to look. Then the newness wears off.. Maybe some of you older and wiser investor types would care to pontificate? __________________ Sarchasm : The gulf between the author of sarcastic wit and the person who doesn't get it. Last edited by Westernskies; 07-25-2008 at 10:31 AM.. Reason: spel czech knot werking

07-25-2008, 09:28 AM	#8
FinanceDude Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Aug 2006 Posts: 7,727	I took my 37% and ran.........I am not that greedy. I think Baron Rothschild said it best: "Fortunes are made by selling too soon"........ __________________ Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)

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