Monsanto is fully valued.
music selection: “Hush” — Deep Purple
weigh-in: 203.0 (2.0) – yeah!
Back on 6MAR2017, I bought 87 shares of MON for 114.60. The thesis was that Bayer was making an all cash buyout offer at 122 dollars a share. The offer was tentatively accepted by the Monsanto board and looked liked to successfully complete. I saw some easy merger arbitrage money on the table and decided to deploy some capital.
On Friday, Bayer cleared up the last of the market uncertainty on whether the deal would be approved by regulators and whether they would be able to come up with the cash by divesting of the assets most likely to be of regulatory concern for almost 7 billion in cash. Shares jumped about 4% to a hair over 122, the offer price. Shares were fully valued and it became time to cash in.
Today, I sold MON for 122.50 a share. Along the way, I collected 1.62 in dividends. The trade was in force for 224 days and yielded 13.54% annualized. Not bad for a low risk trade.
Devour your prey raptors!