Seeking Alpha by Adding Beta

Yahoo Microsoft has really entered into final game with Microsoft showing inclination to raise the bid ($33) and Yahoo shareholders giving an indication what price ($37) would be acceptable to them. Since there is about $4 difference, it is likely that final deal would be reached at $35 raising total bid to about $50 B+ as I initially predicted in January. How to play into this game ? One can buy May 30 (55-60 cents) or Jun 30 calls (.90 to $1) potentially doubling the money in next few days or losing all (if Microsoft withdraws the bid). With GDP showing positive growth (0.6%) and interest rate cut by another 25 basis points, all the foundation is set for markets to get some foot-hold. So if no other major shoe drops in financials, markets are heading higher and would touch 13500 in summer. Emerging markets are also showing some life with Latin America, China, India all growing nicely in last few days. Fertilizer companies are really hot these days and one particular company Interpid

Looks like markets are steadily marching upwards and should touch 13000 by end of May (could come as early as this week). Most investors are feeling that worst may be over for financials and hence willing to make small investments. There could be few bumps along the way (similar to Jan or Mar) but in general, markets are heading higher for few months now. Fed would be having their last rate cut this week (by 25 basis points) before it takes a pause. Microsoft and Yahoo entering into final end-game but I was surprised to find no action on Monday morning. If Microsoft starts proxy battle with $31, they are likely to lose it. If Steve Balmer wants to win this, he should offer $35 as final offer and start a proxy battle - there are very high chances (close to 80%) that with $35, he would win the proxy. What's the reco for this week: MGI (moneygram) - This stock is still trading around 1.5 to 1.6 and could be a good long-term value since I see moneygram booths in Lucky, Walmart and othe

Great article by Henry Blodget on this topic. Since we did a project on Yahoo Microsoft Takeover battle in our M&A class at Haas, it was interesting read. Check it out http://www.alleyinsider.com/2008/4/yahoo_microsoft_playing_next_week_s_chess_game My prediction is that with Yahoo's potentially strong earnings, Microsoft would agree to about $35 price and get the deal done It would be an exciting week for sure:-) /Shyam

Last week was a pivotal week with quite a few notable events in stock markets such as: Blowout earnings by Google and biggest gain (20%) in Google stock in one day. Just in March, Google stock came very close by my prediction about $399. Now it is heading higher and would cross $600 in summer 08 Financials finally started showing upward trend with most of the stocks (and associated ETF ) up by 10-20% plus DOW index is at mid-point (12750) of my short-term lower (12000) and higher targets (13500) Stock indexes in emerging countries except China showing recovery signs So where do we go from here ? With major earnings due out in next 2-3 weeks, my prediction is that earnings would come out OK compared to worst earnings expectations and markets would remain stable and show slightly upward trend There would be one or two major misses (like Nokia ) but would not impact overall markets in major way Financials and technology continue to show upward momentum Apple and Amazon should similar le

As continuation on my recent posts, today's news about TPG planning to invest about $5B in WaMU (WM) and possible KKR investment in National City ( NCC ) seems to concur that smart money has started moving into financial/banking stocks. This could be start of bottoming out process. I think it's still time to get onto this gravy train and make upto 30-40% in 12-18 months. Of course there are risks to this approach since when Q1 results start coming out, it is possible that write downs could make these stocks go down once more. However as long as one believes that these companies are not going BK, they would survive and return decent returns. My recommendations are NCC at $9 and WM at $11-12. Looks like recent trends in PE world is changing - now that many PE deals are falling apart (Clear Channel, Sallie Mae) and these PE firms still having lot of money to put to work, they have started investing in distressed assets like beaten down stocks. But then one can do on their ow