Is CFC a buy?

[Ash Housewares]

Currently trading at $6.32, after Q4 results are released. BofA says the loss was expected and won’t derail the sale, which values CFC at 4.1 billion. At the current share price the market cap is 3.66 billion, so if the deal goes through in the third quarter it should be a 12% gain from today. Am I missinig anything? Other than the possibility of the deal falling through, which seems small?

[(former)FormerSanDiegan]

Countrywide’s shareholders get the right to exchange their stock for .1822 shares of Bank of America stock.

Based on today’s prices for both BofA and CFC that’s actually 20% above CFCs current price. But, this depends on BofA’s share price holding up as well.
However, if the deal falls through and CFC goes bankrupt you get walloped. Also, if BofA’s stock declines 20% you get zero gain.

One strategy might be to buy CFC and sell BofA short, so that you are guaranteed the spread (minus option costs) if the deal goes through.

Here’s a recent article on the subject …
http://money.cnn.com/2008/01/23/news/companies/boyd_bank.fortune/index.htm?postversion=2008012316

[(former)FormerSanDiegan]

Countrywide’s shareholders get the right to exchange their stock for .1822 shares of Bank of America stock.

Based on today’s prices for both BofA and CFC that’s actually 20% above CFCs current price. But, this depends on BofA’s share price holding up as well.
However, if the deal falls through and CFC goes bankrupt you get walloped. Also, if BofA’s stock declines 20% you get zero gain.

One strategy might be to buy CFC and sell BofA short, so that you are guaranteed the spread (minus option costs) if the deal goes through.

Here’s a recent article on the subject …
http://money.cnn.com/2008/01/23/news/companies/boyd_bank.fortune/index.htm?postversion=2008012316

[(former)FormerSanDiegan]

Countrywide’s shareholders get the right to exchange their stock for .1822 shares of Bank of America stock.

Based on today’s prices for both BofA and CFC that’s actually 20% above CFCs current price. But, this depends on BofA’s share price holding up as well.
However, if the deal falls through and CFC goes bankrupt you get walloped. Also, if BofA’s stock declines 20% you get zero gain.

One strategy might be to buy CFC and sell BofA short, so that you are guaranteed the spread (minus option costs) if the deal goes through.

Here’s a recent article on the subject …
http://money.cnn.com/2008/01/23/news/companies/boyd_bank.fortune/index.htm?postversion=2008012316

[(former)FormerSanDiegan]

Countrywide’s shareholders get the right to exchange their stock for .1822 shares of Bank of America stock.

Based on today’s prices for both BofA and CFC that’s actually 20% above CFCs current price. But, this depends on BofA’s share price holding up as well.
However, if the deal falls through and CFC goes bankrupt you get walloped. Also, if BofA’s stock declines 20% you get zero gain.

One strategy might be to buy CFC and sell BofA short, so that you are guaranteed the spread (minus option costs) if the deal goes through.

Here’s a recent article on the subject …
http://money.cnn.com/2008/01/23/news/companies/boyd_bank.fortune/index.htm?postversion=2008012316

[(former)FormerSanDiegan]

Countrywide’s shareholders get the right to exchange their stock for .1822 shares of Bank of America stock.

Based on today’s prices for both BofA and CFC that’s actually 20% above CFCs current price. But, this depends on BofA’s share price holding up as well.
However, if the deal falls through and CFC goes bankrupt you get walloped. Also, if BofA’s stock declines 20% you get zero gain.

One strategy might be to buy CFC and sell BofA short, so that you are guaranteed the spread (minus option costs) if the deal goes through.

Here’s a recent article on the subject …
http://money.cnn.com/2008/01/23/news/companies/boyd_bank.fortune/index.htm?postversion=2008012316

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