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 electronics retailer Best Buy (NYSE: BBY ) are up 10% today on speculation the company's founder would make a buyout offer.
So what: According to reports, founder Richard Schulze is working with Credit Suisse to explore a takeover, although no one will confirm the reports. He may also be trying to push a turnaround effort into high gear as his 20% stake in the company becomes worth less and less by the day.
Now what: As dire as Best Buy's stock performance has been the company's financial performance isn't as bad as you may think. The company is expected to earn $3.62 per share this year, meaning shares trade at just over six times earnings, so a buyout would be an interesting move. I wouldn't bet against the buyout, but betting for it or trying to pinpoint a price isn't a gamble I like either.
Betting on buyouts is risky business and can lead to wild swings in a stock's price, both up and down. But if you like the turnaround effort and the value shares currently trade at I don't think this is a bad bet at the current price.
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