9 Weeks to Better Options Trading: Special Situations: Earnings Reports, Takeovers, and Extreme Market Moves
Veteran options trader Steve Smith breaks down special situations.
While these types of transactions may continue, I think the best money-making opportunities overall will come in the reemergence of private equity and activist investor hedge funds making deals to take companies private. A great example of this was the recent purchase of PF Chang (NASDAQ:PFCB) by Centerbridge Partners for $1.1 billion, or a 30% premium to the prior day’s close.
I think mature retailers, with their relatively modest capital expenditure requirements and good cash flow will be prime sector targets for takeovers. Two names I think are ripe are Abercrombie & Fitch (NYSE:ANF) and Urban Outfitters (NASDAQ:URBN). Both have recognizable and respectable brands, but have stumbled and are ready to be turned around by skilled managers.
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