RM's occasional market calls...
- Thread starter Rearden Metal
- Start date
The mystery stock is ADT. Current price: $44.07
This market call was brought to you by the letter 'H', and my massive ego.
This market call was brought to you by the letter 'H', and my massive ego.
I'm especially long the Jan '14, 40 puts. Current price: $2.525
Holy shit! Looks like my recommendation was taken VERY seriously: Over 700 of those Jan. '14 puts traded so far today, which is more than 10 times average. Now I'll feel pretty bad if this is the one time I finally F-ed it up.
:eek:
Edit: 881 traded and counting...
:eek:
Edit: 881 traded and counting...
I personally didn't hedge out the takeover risk with calls because that's just how I roll, but I suppose a more conservative trader would consider doing so.
Question: Does AT&T have a history of buying up companies like ADT to expand? I can't think who else would want to buy them, because Comcast & Time Warner have already set up their own competing home security monitoring infrastructure, and wouldn't need to buy a ready made company.
Question: Does AT&T have a history of buying up companies like ADT to expand? I can't think who else would want to buy them, because Comcast & Time Warner have already set up their own competing home security monitoring infrastructure, and wouldn't need to buy a ready made company.
<b>Ten freakin' thousand</b> ADT Jan. 40 puts traded today, at a cost of like $2 1/2 mil??? Damn!
For those who sincerely believe that ET is pikers-only territory, <b>you were wrong</b>, and I got your proof right here:
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3786407>
For those who sincerely believe that ET is pikers-only territory, <b>you were wrong</b>, and I got your proof right here:
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3786407>
Cramer just lurrrrves the other side of our trade!
"Cramer doesn't recommend speculating on takeovers unless the company's fundamentals are sound. In this case, he thinks ADT's fundamentals are excellent. He also likes that the company is cutting costs and paying down debt.
ADT's stock currently pays a 1 percent dividend yield, but Cramer noted the company has $1.9 billion on its buyback authorization. Looking at current levels, he thinks ADT has much more room to run and considers it a buy, buy, buy!"
http://www.cnbc.com/id/100472138
"Cramer doesn't recommend speculating on takeovers unless the company's fundamentals are sound. In this case, he thinks ADT's fundamentals are excellent. He also likes that the company is cutting costs and paying down debt.
ADT's stock currently pays a 1 percent dividend yield, but Cramer noted the company has $1.9 billion on its buyback authorization. Looking at current levels, he thinks ADT has much more room to run and considers it a buy, buy, buy!"
http://www.cnbc.com/id/100472138
Hey RM,
Just curious, as you are a trader and understand that timing is extremely important...especially with options...
what makes you so confident that this will breakdown this year and not 2 -5 years from now?
What will be the catalyst that makes people realize the valuation may not be warranted at these levels?
I dont know too much about the firm...so cant really add much...does your view on the overall market play into this? think a big pullback coming too?
Just curious, as you are a trader and understand that timing is extremely important...especially with options...
what makes you so confident that this will breakdown this year and not 2 -5 years from now?
What will be the catalyst that makes people realize the valuation may not be warranted at these levels?
I dont know too much about the firm...so cant really add much...does your view on the overall market play into this? think a big pullback coming too?
A lot of the gains in ADT shares (from 36 to 50) are likely the result of interest from Comcast, VZ and T. T has a central monitoring facility so they may be content to build. VZ has no central monitoring; only a smartphone app. Comcast also wants to expand in the space.
The problem is paying 30x so the only deal that makes sense is a match with VZ. T is still smarting over the t-mobile debacle. VZ is probably the most likely buyer, but the (ADT) shares aren't acting like they're in play.
The problem is paying 30x so the only deal that makes sense is a match with VZ. T is still smarting over the t-mobile debacle. VZ is probably the most likely buyer, but the (ADT) shares aren't acting like they're in play.
I wouldn't buy a stock on spec that it will be taken out.
A lot of these take out decisions are based on emotion and personal issues of the powers that be.
A lot of these take out decisions are based on emotion and personal issues of the powers that be.