I'm looking at DG which today announced that it will be bought out at a price of $22.00.
It shot up in premarket, but right now is still trading in the 21.20's.
Am I correct that buying at these levels is pretty much a guaranteed .70-.80 cents per share profit?
Are there any downsides to buying a stock when a buyout is announced. The only two I can think of are: 1. The buyout could fall through 2. You have to have your money tied up until the buyout actually takes place and you get the buyout price.
Am I thinking correctly here? Anything else I should be considering?
Jo
Posted by metal1 on :
you are pretty much right on. the buy out could fall through and you lose money. they buyout goes through and you make a small profit. the real question is how long did it take you to make that small profit. they expect to close in the third quarter so you have to tie up your money for six months for a minimal profit with risk. you could make more in a six month CD
Posted by Jo4321 on :
Thanks. I hadn't seen the closing date and assumed that it would be quicker than that.