More M&A Commentary

Playing the M&A arb spreads can generate a nice little income during a volatile market. Right now, I'm only focusing on M&A's that were announced after the start of this financial crisis. Deals such as Getty Images (Ticker: GYI), which I'm playing, is a strong deal. Whereas Penn National Gaming (Ticker: PENN), which was announced before the start of the financial crisis is falling apart. Penn National Gaming is current trading at $37.04, which is well below the buyout price of $67+. This deal will get negotiated down to a lower price or will not get done at all. In this environment, I would go for recently announced deals such as Apria Healthcare (Ticker: AHG), which is being acquired for $21 / share by Blackstone (Ticker: BX).

M&A, The Ugly Part

The M&A game is full of pit falls. Take a look at Huntsman (Ticker: HUN), which declined ~ 40% because the private equity group, Apollo, is walking away from the deal. This one is going to get real ugly with both sides throwing chairs at one another. Huntsman will get some compensation for this, but the arbs playing this one got steamed rolled big time. So if you do decide to play this game, just be careful. Don't go with the ones with the big spreads... don't get too greedy.

Invitrogen + Applied Biosystems

It looks like the merger & acquisition activity is starting to heat up. One deal that looks very interesting is the acquisition of Applied Biosystems (Ticker: ABI) by Invitrogen (Ticker: IVGN). Invitrogen is paying $38 in cash and stock. As long as Invitrogen stock stays within the band of $43.69 to $46; you’ll end up with ~ $38 when the deal closes. The value of the deal can be higher or lower than $38 based on the stock price of Invitrogen. Basically, every dollar move in Invitrogen will result in a $0.46 move in Applied Biosystems stock. Some analysts are skeptical about this deal, but I see this as a plus plus for both companies. Invitrogen is not overpaying for this company and it’s going to add to earnings over time. This will create a nice one stop shopping for many researchers.

Free Money

One of my favorite blogs for great deals is the Hustler Money Blog. It amazes me that he's able to post so many great deals on a daily basis. It takes time, effort and some creativity to get some of these deals, but it's well worth it. Right now, he's actually going to give $100 to a lucky reader so please check out Free Money for your chance to win. Good Luck...

Getty Arb Getting Close

No, I didn't buy more Getty Images (Ticker: GYI)! In today's regulatory filing, the company listed key dates to watch out for. Today was a little road show by the company to pitch it's debt. Next week will be the shareholder vote, which I view as a non event. If everything goes to plan, which I think there's a very high probability, this deal should close in the last week of June or the second week of July at the very latest. I guess I'll start sniffing out for the next arb play.

Key Dates

June 10, 2008 Lender presentation (New York)

June 20, 2008 Shareholder Vote

June 25, 2008 Lender commitments due 5:00 pm (EDT)

Week of June 30, 2008 Comments on credit documentation due

Week of June 30 or July 7, 2008 Close and fund

Credit Card With Low Credit Report?

A lot of finance bloggers out there have very good credit scores and don’t worry much about it. What about the people with poor credit scores (it’s usually a FICO score of below 620)? Can they take advantage of the 0% interest rate loans offered by the credit card companies to their prime customers? Most likely not, but the people with poor credit scores can still improve their scores by using credit responsibly. People may say that you shouldn’t own a credit card if you have a poor credit score, but let’s be real; you’re going to need a credit card. Check out this site that’s offering a variety of credit cards for people with bad or no credit score. You should also check out your credit report to make sure there are no mistakes. Here’s where you can obtain a free credit report. It’s going to take time to build up a good FICO score, but in the end the hard work will pay off with lower credit expenses.

More Getty Images

Did I say that I just finished building a position in Getty Images (Ticker: GYI)? Umm... Not really. I added a bit more of Getty Images today at $34.42. This is going to be a boring arb play, but if you use a bit of leverage the returns get interesting. Again, I'm looking for this deal to close at the end of June or early July.

Here are my transactions in Getty Images:

5/14 $33.01
5/14 $33.03
5/23 $33.44
5/28 $33.46
6/02 $33.42

I'm really done! Now, just wait and see...

Credit Card Plays

I’ve been playing the 0% balance transfer game for a while. I would simply invest the balance transfer cash into a money market and pay off the balance before the balance transfer expired. But lately, it’s been getting harder to find good 0% transfer offers. They often include a 1-3% one-time balance transfer fee, which makes the deal less attractive unless there’s a dollar cap. One site that I like to check out is Visa Credit Cards. It’s a quick one-stop shop where you can find credit cards with: no annual fees, low rates, rewards, etc… And it’s very easy to apply for the credit cards on that site. Even if you’re not playing the credit card balance transfer game, it’s worth to check out all the new types of credit cards. It really boggles my mind to see so many types of credit card offers from the various companies. So if you need to pick a credit card with the best rates, I would check out the Best Credit Card Rates.