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SuperBowl and SuperTuesday

What an exciting start of new month with one of the biggest deal announced with Microsoft bidding for Yahoo for $31. I think it's right move for Yahoo investors even though it will not work in long term (if you just count returns for Microsoft). I am doing M&A course with Prof Peter Goodson in my last semester at Haas. Mr Goodson does not believe in Synergy at all and he has challenged all students to show one major deal where synergy worked out for such deals. I agree with him.
My prediction about this deal is that Yahoo will try to put some blockers to the deal but finally will agree to slightly higher price of $34 (aka Oracle-BEA saga). Disclaimer: I own some Yahoo stock just before earnings and now I am happy camper:-)

Looking at similarly beaten down companies, I think following deal will make lot of sense. Bearing Point is one of the well known brands in IT and strategy consulting. I started following this stock few months back when it was trading at 5. Due to missed earnings etc, it came all the way down to $2. That makes it's enterprise value below $ 1B. With yearly revenues of above $3B, well-known brand name and contracts in hand, this could be a potential target for Indian companies like Wipro, Infosys, TCS or company like IBM. BE is publishing its quarterly results on Feb 6. I expect it to start going up towards $2.50 to $3

Finally financials and housing companies (not to mention bond insurance companies) reversed their direction. With Fed on its side, stocks or mutual funds in this sector will offer one of the returns in 2008. My recommendation is BKPIX (BANKS ULTRASECTOR PROFUND, INVE) or FIDSX (FIDELITY SELECT FINANCIAL SERVI). They are already up more than 10% from their lows in last 10 days.

Here are my few predictions:
  • Patriots will win SuperBowl by 14 points
  • Clinton will win Super Tuesday primaries narrowly. However it would still be far from securing the nomination
  • McCain will seal Republican nomination (and Huckbee will drop out of race)
  • Markets will continue to head higher with couple of 100 point swings on Dow
/Shyam

Disclaimer: Invest at your own risk and I do have positions in some of the recommendations I mentioned.

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