« Hewlett-Packard (HPQ): Another great quarter | Main | South America: The next big growth »

Gambling on Yahoo (yhoo) and Microsoft (msft)

2-21-08:  For the more risky investors, smart money is betting the Yahoo and Microsoft deal will eventually come to an agreement. For now it’s a game of patience. Due to the lack of concrete development or news, shares of Yahoo have slowly been slipping as investors are beginning to question if the deal will consummate. We believed the current stale mate is an excellent opportunity for those that missed the boat.

While shares of Yahoo is currently trading in the $28 range given there hasn’t been significant development (no recent leaks), we all know huge news is just over the horizon.  Of course, the direction of Yahoo shares will depend on this huge news. If Yahoo decides to engage in talks, the stock will rise. If Microsoft decides to move forward with their proxy battle, the stock will likely remain where it is. The odds of these two happening is greater than 60% so we feel such a bet is relatively safe.

The only way Yahoo shares could fall is if Microsoft decides to abandon the bid. Based on Ballmer’s earlier comments, we believed MSFT will not simply walk away without a fight. If they do walk away without a fight, the financial world would be shocked. It would be like a 4 year old being told he/she can’t have more candy and the kid actually listens without any fuss. Not likely to happen… For this very reason alone we believed the upside potential of YHOO outweighs the risk.  Patience is the key. If we were the gambling type, we would be looking to accumulate more YHOO shares at every opportunity.  

Disclaimer: The opinions and reports at iBooyah.com should be validated before taking any investment action. We are not responsible for the completeness or quality of the information. While we attempt conduct thorough research, there are no guarantees in accuracy. iBooyah.com is not liable for any damage caused by the use of any information provided, including information which may be incomplete or incorrect. All materials presented within is not to be regarded as investment advice or recommendations, but for general informational purposes only. We will take no responsibility if you trade based on the information in this site. Past return is no guarantee of future result, trade at your own risk.

Posted by ibooyah on February 21, 2008 10:16 AM |

Post a comment

(All comments are welcome, but please keep them respectable, otherwise we'll just end up junking it. Please do not post rude comments. If you disagree with our view, that is fine, just provide reasons so we can engage in a discussion. To help reduce spam, we require a valid email address, but do not worry, your email will not be exposed after posting. Thank you for your cooperation.)

Search



Add to My Yahoo!