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Can it get any better than an 80% return? (CKXE, rated BUY)
CKXE, the owner of American Idol, has agreed to be bought out by 19x at a share price of 12.00.
that is an 80% premium as of now.
Then why is the stock only at 6.60? i asked myself the same question. it seems as though the terms of the deal, which require 70%+ of shareholders to agree makes the deal not a guaruntee and until there is an indication that the deal is guarunteed then the price will not correct. but i believe that the management, which holds a significant amount of shares, combined with the fact that the deal does present an 80% premium for shareholders, is a good indication the deal will go through. besides, the risk-reward ratio on this stock is probably the best in terms of a short term buy that can be in todays market.
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Deal is all but gold (CKXE, rated BUY)
My earlier post explained why before today, the stock was moving sideways; because the merger at 12.00 per share is not guarunteed.
but as i said, the risk/reward ratio on this is too good to be passed up.
But for those who are still unsure, let us examine this stock.
CKX, the owner of american Idol, has been historically a terrible performing stock. however, 19x agreed to buy out the stock for 13+ per share. earlier this year they revised the agreement to 12/share. as a result, there must be more than 70% approval of shareholders in favor of the deal, to be closed on september 30.
In the past 3 months, there have been 7 major trades from insiders, all buys. the reason? because they firmly believe the deal will be approved, and for good reason. there is no reason for shareholders to vote against a merger which guaruntees them an 80% premium. no one in their right mind would, especially in todays market. additionally, 19x certainly wont back out of the deal, as their CEO, Simon fuller, is also the director of CKX (he created american idol) and holds a significant amount of shares.
this stock is a no brainer, but if you're still unconvinced, check out my other merger picks, all with short term, high returns.
--hgeek
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