There are lots of big-name companies making big gains today. With all major indices soaring, it comes as no surprise investors are making money. What may be surprising is why these companies are surging in value.
Normally, share prices make double-digit leaps on earnings increases, product developments, or other positive news events. Lately however, a giant “for sale” sign is all it takes to catch the eye of the bulls.
Two companies making their investors happy today are Transmeta Corp. (TMTA) and Top Ships (TOPS). Both are selling for 20% more than they were yesterday thanks to news that the firms are on the auction block.
Transmeta, which tried to run its business in nearly every direction imaginable in the past few years, is waving the white flag, hoping it gets the attention of a suitable buyer. The company had a $15.50 per share offer on the table in February, but refused it looking for a higher bidder. One never came and now times are much more desperate.
It is a similar story at Top Ships, but one that may prove more lucrative to shareholders. With one bidder already willing to cut a check for $6 per share (a 50%+ premium) and rumors of more to come, investors that rode the plummet from over $10 have a chance at profits, albeit a small one.
And as you may have heard, shares of the troubled bank, IndyMac Bancorp (NDE), are rumored to be a possible target of Goldmach Sachs (GS) as it ramps up its banking operations. Shares of the company, which were selling for nearly $50 less than two years ago, were trading at $0.23 at the closing bell, a 228% gain on the day.
IndyMac could be a quick way into the banking industry and it offers desperately needed cash flows for Goldman. It will be interesting to see if the rumors are true.
The situation is similar across the investment spectrum. Wall Street is no different than the real estate market. Once values start to drop, they will continue to fall, dragging everything with them.
Remember, if your neighbor’s house plummets in value, so does yours. It is the same concept in the business world.
With so many companies hurting from the nation’s economic slowdown, more and more companies are going to look for buyers. It will create some real bargains and some fantastic opportunities for savvy investors.
Seek out the companies you think are ripe for a sale, invest appropriately and hang on for the ride. There is some big money to be made as this fire sale continues.