Please ensure Javascript is enabled for purposes of website accessibility

Rumor! Innuendo! Why Pall Corporation (PLL) Stock Shot Up 19% Today

By Jason Hall - May 12, 2015 at 12:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Rumors on an acquisition are driving Pall Corporation stock higher today.

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: Filtration systems maker Pall Corporation (NYSE: PLL) stock is up more than 18% today on rumors that an acquisition of the company is imminent. 

So what: According to the Wall Street JournalDanaher Corp and Thermo Fisher Scientific look to be the two main bidders for the company, which would be valued at close to $13 billion based on the jump in stock price.  

Now what: Frankly, these are the kinds of situations where it's easy to get burned, if you're looking to buy stock. It's hard to find any good reason to buy shares of Pall Corporation on this news. While it sounds like a deal is near, there's just no (legal) way to know if there's any upside, and there's all the downside of a deal falling through, which would lead to the stock price plummeting to its pre-rumor price pretty quickly. 

If you're an existing shareholder, it's a harder call. Honestly, if you're not particularly interested in holding shares of either Danaher or Thermo Fisher Scientific, I could understand selling on the news and moving on. However, if you hold your shares in a taxable account and have held them less than one year, it might be worth waiting for this to play out a little more, and try to get to the one-year holding mark to reduce your capital gains tax rate from your nominal income tax bracket to the long-term-gains tax bracket. That could be worth more to you than whatever price the company ends up being sold for, if it does indeed end up less than current speculation. 

These kinds of situations, frankly, are guesswork at best. Any decision that you make -- besides just holding your shares if you're a current investor and waiting for this to play out -- is speculation before anything becomes official. Just remember that, and if you do make a move before we have any more information, you're guessing. Maybe you guess right; maybe not. It's probably a better practice to just sit back and wait for more information.

If nothing comes from this and the stock price returns to pre-rumor prices, you still own shares of the company, and for the same reasons as you bought. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.