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In Focus



April 20, 2009 – Comments (2) | RELATED TICKERS: FMCN.DL , SINA

In Focus in a big way, actually. Almost half of my money is in Focus Media (FMCN). I also own some arbitrage puts on SINA, but they keep diverging. I can't grasp why. Is the deal not going to go through? Then why is FMCN falling? Their stock fell on news that they were selling their fastest-growing, most profitable division to SINA. Questionable call, but if they're getting more than 1/3 share of SINA per share, then why are they trading for less than 1/3 (and now less than 1/4) SINA's price? Especially with so much cash on their debt-free balance sheet!

I'm exhausted and baffled from wracking my brain to figure out a scenario where a long FMCN, short SINA via puts arbitrage could lose money. If the deal doesn't go through, you still have a hot growth stock trading for an insanely low multiple. Can someone help me out here?

2 Comments – Post Your Own

#1) On April 20, 2009 at 12:53 PM, FleaBagger (27.35) wrote:

It just occurred to me that the news sites I'm looking at may have screwed up the per share calculations on the ADR's. Can someone more familiar with ADR's help me check that out?

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