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 Chinese electric-motor manufacturer Harbin Electric
So what: Harbin's shares had been torpedoed by a critical report from short seller Citron Research, but they made a bit of a comeback last week after the company refuted Citron's claims. Today, the stock was flying high thanks to a press release saying that Harbin had entered into a definitive merger agreement that would have the company bought out by its chairman and private-equity investor Abax Global for $24 per share.
Now what: Should this buyout go through, it would be a severe blow to skeptics who have sold Harbin's stock short. The stock has already posted hefty gains, but it would still have to rise an additional 70%-plus to reach the buyout price. What does it mean that Harbin's still trading so far below that price? Essentially, investors remain very skeptical that the deal is for real.
I won't jump on this gamble, but over the coming six months or so -- the deal is expected to close in the fourth quarter -- investors on one side of this bet will likely make a killing.
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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.