Banking on Profits: National City in Buyout Talks

National City Corp. (NCC) is making headlines once again. If you think its shares were volatile last week, wait until you see what happens when a bidding war erupts.

There was some not-so-surprising news hitting the wires this morning. For nearly two weeks now, shares of National City Corp. have seen tremendous trading volume. Share price has been extremely volatile as speculative investors buy and unload shares of the company.

Today, those investors are likely to see even more share price action as rumors are flying that the bank may be hanging up a giant “For Sale” sign.

While nothing formal has been announced, the company is apparently in talks with PNC Financial Services (PNC) and The Bank of Nova Scotia (BNS) (a firm operating in what is reported to be the safest banking industry in the world, Canada).

The share price jumped on today’s news. Over the last month, National City’s valuation has fluctuated wildly making long-term investors pull their hair out.

The share price closed yesterday at $2.23. Before the company started its precipitous decline in value in May of 2007, those same shares cost nearly $40. Expect a jump to around $3.00 or even more today.

There are multiple ways to play this situation. If you recall, a few weeks ago I advised readers to purchase the company’s January 2.5 Calls (NCAAZ.X). Those that followed my advice, racked up gains of at least 85%.

A similar situation is possible today. Keep your eye on the company’s share price, trading volume, and most importantly, the news surrounding a possible buyout. When you see an opportunity, take advantage of it.

As soon as I see one, I will let you know.

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Stock position: None.