I have a great time navigating through this empire and investing in stocks that other people recommend. My scorecard over time is not too bad and I attribute that to listening to smart people whose philosophies I can relate too and support what I believe. But I get my biggest kick reading about people who have forgotten more about investing than I'll ever know or would want to learn or have time to learn. That's why I subscribe. So for Matt Richey, my hat is off to you. I have ridden the CNS bandwagon since your recommendation because of your expertise and because I used the product. Today is a very good day in CNS land and I want to thank you for that.
I am sorry for those of you who jumped off the gravy train too soon. The sale means I will achieve an 80% return on my investment.FuskieWho will be breathing right tonight...
Wow, what an incredible stock. Purchased Aug of 2003 for $12/share, 400 of 'em. Trying to decide if I should take my bux and run, now, or wait for the offer to be countered? Either way, wow.Hats off to the Fools.Kurt
For those new to cash acquisitions, there are a couple of things to consider if you wonder whether to cash out now by selling your shares on the market or wait until the acquisition closes. If you hold your shares, and the deal goes through, your shares will disappear and you'll have $37.50/share in cash in your account. But consider the following:1. The first risk of holding and not selling on the market is that the deal won't go through. That's not likely here, but possible, and has happened many times in other deals. This usually happens because the buyer's due diligence of the target turns up something unexpected.2. In these deals my first advice is to sit still, at least for a while. That's to see if there may be another bidder for the target. Given the significant premium being paid for CNXS, I don't think that's coming with this deal, but it's possible.3. After the initial wait period, as the market sees the deal will likely go through, and there will be no new bidders, the market price for the stock will approach the buyout price, but usually with a slight discount because there is a risk the deal won't close.4. Then consider the current market price as compared to the buyout price. Given this deal won't close for several months, what's the return for waiting those months? The closer the market price to the buyout price, the less the return of waiting. You should also check to see if the target will be paying a dividend during the waiting period.5. Then once the market price is near the buyout price, do you have a better alternative for the cash, if you were to sell early?6. What's your holding period? If you've held your shares for less than a year, then to sell now would result in a short term capital gain, losing the advantage of a long term gain. Since CNXS is an older Hidden Gem, many readers who bought the stock will already have held the shares for more than a year. If you've held the shares for less than a year, and you think the deal will close after you've established your one year holding period, then it pays to wait, to benefit from the long term capital gain tax advantages. This deal is supposed to close early next year, so check your holding period.7. That leads to tax year planning--since this deal will likely close early next year, you can determine the timing of your gain, and whether you take it this year or next.8. Check with your broker to see what fee, if any, they will charge you for processing the deal--i.e., what fee they charge for processing the exchange of your shares for cash. Depending on the trading commission you pay, it may be cheaper to sell on the market than paying the fee in the buyout. So even if you wait until next year, selling your shares shortly before the deal closes may be cheaper for you.I'm sure there are other things to consider, but it's getting late!! For now, if you're still holding your shares, just toss back a cold one and pat yourself on the back! And thank the guys at Hidden Gems-just from today's gain I think I earned enough to pay for the newsletter for the next 8-10 years!Raleigh1208
Well said, Raleigh--I think that there is very, very little chance of this deal not going through, but as with all things, you just never know.To expound on what you said in #7, there is an attractive reason to holf on beyond the chance that another suitor will pop up. Even if you are into LT capital gains for CNS, there is also a time value of money element to consider. If you sell before December 31, your LT cap gains are valid for 2006. If you wait until January 1, they fall to 2007. Depending on your tax payment schedules, that could be a significant amount of time in which you get to hold onto your gains without paying out that 15%. On the flip side, if you have realized losses this year, it might be a good idea to sell some or all of your CNS in order to net it out against those losses.Bill Mann
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |