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Bad news for FMCN/SINA arbitrageurs



June 12, 2009 – Comments (2) | RELATED TICKERS: FMCN.DL , SINA

...such as myself. Roth Capital predicts Sina will renegotiate the terms of their semi-merger with Focus, and Focus shares plummeted again today, to even farther below one third of Sina.

The good news is that Roth is moronic. There's no reason for Focus to accept lower terms just because Sina's having a bad quarter or two. They're being paid in Sina shares, after all. The better news is that Sina is overvalued here, and got away with a scary bad quarter without much effect to their share price (down 9%? Woo, big deal!) - so shorting Sina/owning puts is still a good idea; and Focus' fastest growing, most profitable section is what's on the table, so if the deal doesn't go through, FMCN could remain a great growth stock.

Worst case scenario from my view: Focus accepts lower terms. This would be bad news for Sina too, though, kind of like when you name your own price on and your first offer is accepted: you paid too much. 

I still think I can get out of FMCN around my cost basis, and expect my SINA puts to pay off handsomely.

2 Comments – Post Your Own

#1) On June 16, 2009 at 9:39 PM, kagame (< 20) wrote:

SINA just got upgraded by Goldman, they dont care about the short term fundamentals anymore. 

Roth said absolutely nothing of any merit.  Zero justification for their position, theyre obviously manipulating whores.

BTW look at their track record.  They recommended FMCN a buy a year ago and havent altered that call until now.  Way to call tops and bottoms in reverse Roth.

Such a joke.  Downgrades like this will one day have the effect of making a stock go UP 10%.  That would only happen in a RATIONAL and EFFICIENT market though, not our current one, which in the short term is a massive scam ponzi scheme!

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#2) On June 17, 2009 at 11:20 AM, FleaBagger (27.45) wrote:

Do I sense a little frustration?

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