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 China Fire & Security
So what: Small Chinese companies have had a rough go of it on the U.S. stock markets over the past few years. Targeting low transparency, investor skittishness, and, in some cases, actual fraud, short sellers have taken many of these stocks to the woodshed. While China Fire was at the receiving end of an early short-selling attack, the company has actually had some business problems in recent years that have dragged the stock down. But now the company and its management team may be getting ready to say "I'm taking my ball and going home" after it received a buyout offer from what it refers to as "a leading global private equity firm."
Now what: The details are still a bit murky at this point -- the press release simply said that the offer was for "a price which represents a premium over the current stock price." Management, which owns a substantial piece of the company, has been given the option of rolling its stake into the new private company. Because of management's involvement, lawyers have already swarmed in, raising the concern that management won't fight for the best price for shareholders.
If you're a current shareholder, it definitely seems worthwhile to stick around to see what shakes out from this. If you're on the sidelines, however, I wouldn't be too quick on the trigger to try and chase a quick gain from the potential buyout here.
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