This is one of those deals that seems to be destined to close–probably in the fourth quarter. It’s a deal that makes sense: Pfizer is a large acquirer and there has never been competition for Wyeth since the deal was announced; Pfizer needs to expand their drug pipeline soon and Wyeth meets that need; they have a definitive agreement and few financing restrictions; and shareholders like the deal.
So why is the spread trading at a premium of 2.16? I believe its because there is far less hedge fund risk arbitrage capital being put to work this year due to the wealth destruction in the last nine months. PFE trades 54 million shares per day and WYE does 11 million…there’s simply not as much capital pushing these stocks closer together, so the spread tends to drift up with less effort.
I think this merger is low risk and still offers good yield for the long term hold provides acceptable rotations for short-term (intraday) trading opportunities.
Darryl Van Dyke
Hello. This is the first blog post in what I expect to be many in the future. I will be adding trading tips, commentary, musings…ideally, information that will make you a better and more informed trader. If you are not familiar with my firm, InterSight Trading is a trading education service for those wanting to either begin a career in trading, or to improve and refine your skills if you already a successful trader. A trader’s learning never stops and I’m here to help you get more consistently profitable.
There are already many online trading education services and blogs out there already. However, what makes me different from the vast majority of trading educators and so-called “experts,” is that I’ve been a full-time trader and have made my living from trading profits alone. In my last four trading years, my net percentage return on trading capital has been consistently in the mid triple digits (see www.intersighttrading.com for details). According to my knowledge and research, no one else posts claims anywhere near that (or at all!). Think about something: have you ever noticed that most online trading educators don’t show a track record? Since this is a results oriented business, the only reason I can assume why someone doesn’t show their year-over-year results is because, well, they don’t have any…or if they do, they must be very poor or inconsistent. Try asking one of the “gurus” at a free trading event sometime and you will get an awkward response or excuse.
OK, enough ranting. As you can see, this is a pet peeve of mine. In fact, the main reason I started InterSight Trading is because there’s a severe lack of successful traders teaching others how to trade. My goal is that you will “Trade Like An Expert by Learning From An Expert.”
Stay tuned to this Blog.
Best,
Darryl Van Dyke