December 22, 2010
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of office supplies retailer Office Depot (NYSE: ODP ) popped 10% in intraday trading today on renewed takeover speculation.
So what: Between the recent departure of CEO Steve Odland and perpetual margin pressure from industry king Staples (Nasdaq: SPLS ) , as well as low-cost giants Wal-Mart (NYSE: WMT ) and Costco (Nasdaq: COST ) , analysts have been tapping the beleaguered Office Depot as a pretty good candidate to be taken over. So, naturally, a fresh round of buyout buzz was triggered when Office Depot filed an 8-K last night saying it had entered a change-in-control deal with President Steven Schmidt and company officers Charles Brown and Michael Newman to "diminish the potential distraction due to personal uncertainties and risks that inevitably arise when a change of control is threatened or pending."
Now what: I wouldn't be so quick to jump on today's speculation-fueled surge. Office Depot lacks the underlying fundamentals to keep a place in most Foolish portfolios, so buying today would simply be a speculative bet. It might end up paying off, but without any real competitive advantage in the space, the downside seems too big to even take a chance.
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