5 ms·

And to give even more context, it was $170.00 back in Oct 29 when it was first announced. Thus, if you bought then and sold now, you'd have a 11.7% return in 8

And to give even more context, it was $170.00 back in Oct 29 when it was first announced. Thus, if you bought then and sold now, you'd have a 11.7% return in 8 months. The S&P index would've returned 12% in comparison. Not risk-free by any means, but almost certainly less risk than buying the S&P index during that time period. There was a reason Warren Buffett parked a ton of cash into Red Hat stock after it was bought.

brianwawok 7y ago
Is it less risky? Say a decent chunk of your portfolio in a single stock? And something weird happens during due diligence , not only is the acquisition over - the stock will bomb. Not sure how often acquisitions fall through after being announced, I assume very low. But still seems similar or higher risk then a stock fund.
- lonelappde 7y ago
  Redhat has a 20year history as a public company, it's very unlikely that there'd be a big surprise in due diligence.
  - bklyn11201 7y ago
    I think the worry was less due diligence and more a weird anti-trust case from USA, China, or Europe.
- RickJWagner 7y ago
  I saw (felt) this happen. Worked for Acxiom when they were to be bought by Silverlake. The stock shot up to near-sale-price levels, where I should have sold (but did not). The deal came unraveled, Acxiom stock dropped like a rock and the company had a reputation as 'damaged goods' for many years. Lesson: There is a small upside, but a massive downside that can materialize.
  - brianwawok 7y ago
    Doesn’t happen a ton but yah it sounds rough if it does. Maybe similar risk profile to local government bonds. Common case you can a few %. If your town goes flint you take a big haircut.
lonelappde 7y ago
There's a lot of market timing in that number. 2018q4 had huge volatility in the stock market. Market dropped 10% during October.
neogodless 7y ago
$116.68 right before the announcement! The $172 was the immediate jump. https://finance.yahoo.com/quote/RHT/chart?p=RHT https://finance.yahoo.com/quote/RHT/chart?p=RHT (See Date Range controls.)
- airstrike 7y ago
  I think he meant "announcement of the closing", which I agree is a bit confusing

brianwawok 7y ago

Is it less risky? Say a decent chunk of your portfolio in a single stock? And something weird happens during due diligence , not only is the acquisition over - the stock will bomb. Not sure how often acquisitions fall through after being announced, I assume very low. But still seems similar or higher risk then a stock fund.

lonelappde 7y ago
Redhat has a 20year history as a public company, it's very unlikely that there'd be a big surprise in due diligence.
- bklyn11201 7y ago
  I think the worry was less due diligence and more a weird anti-trust case from USA, China, or Europe.
RickJWagner 7y ago
I saw (felt) this happen. Worked for Acxiom when they were to be bought by Silverlake. The stock shot up to near-sale-price levels, where I should have sold (but did not). The deal came unraveled, Acxiom stock dropped like a rock and the company had a reputation as 'damaged goods' for many years. Lesson: There is a small upside, but a massive downside that can materialize.
- brianwawok 7y ago
  Doesn’t happen a ton but yah it sounds rough if it does. Maybe similar risk profile to local government bonds. Common case you can a few %. If your town goes flint you take a big haircut.

lonelappde 7y ago

There's a lot of market timing in that number. 2018q4 had huge volatility in the stock market. Market dropped 10% during October.

neogodless 7y ago

$116.68 right before the announcement! The $172 was the immediate jump. https://finance.yahoo.com/quote/RHT/chart?p=RHT https://finance.yahoo.com/quote/RHT/chart?p=RHT (See Date Range controls.)

airstrike 7y ago
I think he meant "announcement of the closing", which I agree is a bit confusing