Investment Analyst Sam Frost joins Ben Nye in today's video, taking a look at a couple of the biggest proposed deals of the year.
First up, NXP Semiconductors (NASDAQ:NXPI). A supplier of integrated circuits to both the auto industry and mobile phone industry, we thought the company's leverage to automobile technology advancement and to the phone upgrade cycle made the shares attractive when we purchased the position. We still do. Now, however, we have been pleasantly surprised by the overtures made by Qualcomm (NASDAQ:QCOM) to acquire NXPI in an all-cash $110/share deal. What we can't understand is why NXPI trades at a 8-9% discount to the proposed price. Sam and Ben discuss the reasons why this could be the case and the merger arbitrage opportunity the news represents.
Next, the pair take a look at AT&T's (NYSE:T) apparently sudden decision to try to purchase one of the largest media companies in the world in one of the largest deals of the year. We are especially surprised at the speed with which the deal appears to be moving forward. Sam and Ben hit the high points before embarking on a wide-ranging discussion in which they talk about the "second-derivative" plays - what stocks benefit if this deal goes through. They are not a fan of T's move here - but they do like the shares of another telecom giant, Verizon (NYSE:VZ).
Next week we plan to preview a number of earnings reports. We have a few on our list, but send us your tickers and questions to @tuskmediallc or in the comment section here, and we will do our best to provide you with an analytical preview of your requested reports.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in NXPI, QCOM, T, TWX, VZ over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.