The main problem cited with stocks trading at discounts to their net current assets is that there are no catalysts on the horizon, so presumably the stock price can stay there for a long time. The trouble with merger arbitrage is that the downside is large, as if the deal falls through, the stock could fall big. But at Oddball Stocks, Nate appears to have uncovered a favourable combination of these two circumstances.
The stock is a net-net, so the downside may be protected. But at the same time, a buyout offer has been made above the current price, which provides the potential catalyst. Read the full article here.
Disclosure: No position
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