Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

EMC VMW stub trade ...pop or beginning of long outperformance?

If anyone looks at stub trades, EMC  VMW is most certainly on the radar. You probably wondered why it sold off, and loaded the boat on the way down. As many of you know I advocate piling into these obviously undervalued situations when money flows somehow provide stat-arb  worthy  results. Tack on an event, an activist investor or 2, huge liquidity, and you have the Mother of All Stub Trades. Thats what happened in the past 2 weeks . EMC / VMW stub dropped to 9.50 (using .16 VMW). Some may ask..."$9.50? What does that mean to me, you broker monkey?"  I responded by pointing out 2 things. Comp returns and historical regressions vs. SPY , and the outright almost 3 std dev move the EMC stub has made from its 30 day moving average. Also, RSI on the stub WAS below 25..Indicating very negative sentiment. But why? Really, WHY would this happen. The answer is money flow. A major BD put out a "BUY" recommendation on VMW. This cause VMW to temporarily outperform. BUT those who listened realized a 10% outright move vs. SPY on a relative value basis... and a move in the stub from 9.50 to 10.10. Is this a time to take profits? Well, if I had millions of shares and traded hi-frequency, of course I would take profits on a PORTION of my position. But the story has not changed. Do YOUR homework on EMC VMW and understand we are not playing for 10% moves...I am playing for 30+% outright. I think the smart guys at Pershing Square may have those return numbers in mind as well. Just a guess.

Disclosure: long EMC short VMW