The crisis, and the bungled attempts of the government to ‘fix’ it, is setting up some great contrarian investment plays.
“All it takes to make money on Wall Street these days is a ‘for sale’ sign,” says Andrew Snyder.
“Companies in every industry are hurting from the financial crisis.
Their only way out is to hope a buyer comes along. The action is
creating a lot of great profit potential for investors.”
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. (NASDAQ:TMTA) and Top Ships (NASDAQ: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.
Mega-gainer
And as you may have heard, shares of the troubled bank, IndyMac Bancorp (OTC:IDMC), are rumored to be a possible target of Goldmach Sachs (NYSE: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 its
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.
