Long/short equity, deep value, value, special situations

A Sober Look At InterOil's Deal With Total SA

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"In Philadelphia, it's worth 50 bucks."
- Pawnbroker, Trading Places

An old Wall Street adage is "Buy the rumor, sell the news." I have two problems with this advice. First, it is hard to apply in situations where the rumor mill has been in overdrive for years. Second, it assumes that an investor will be able to make an orderly exit once the "news" finally hits. Both problems were illuminated rather brightly this month in the case of NYSE-listed InterOil Corporation (NYSE:IOC) and its long-awaited announcement of a strategic partnership with oil and gas major Total SA (NYSE:TOT) of France.

In two prior articles (here and here) I summarized the...

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