November 8, 2012
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 Bakken shale oil producer Whiting Petroleum (NYSE: WLL ) jumped as much as 16% in early trading, after rumors resurfaced that Statoil (NYSE: STO ) may be interested in the company.
So what: There were rumors circulating that Statoil may be interested in buying Whiting Petroleum for around $65 per share, according to Reuters, which cited benzinga.com. The problem is that Benzinga was also citing a dealReporter article from September in their rumor, and Bloomberg reported that the rumor is old news. Check out the rumor for yourself by clicking here to see if you think it's credible.
Now what: The pop didn't last long this morning, but a few investors were suckered into the speculation for a short time. This is why it's wise not to buy on speculation, especially when it's coming from suspect sources. Shares are now trading about 3% higher today, which is much more reasonable, given the fact that a buyout from Statoil doesn't appear imminent upon further review.
A buyout may happen but, if you're buying Whiting Petroleum here, make sure that it's based on the company's fundamentals, not just the possibility of a buyout. The buyout should strictly be upside, not an investment thesis.
Interested in more info on Whiting Petroleum? Add it to your watchlist by clicking here.