Time to start catching up on my posts – but first, the news item of the day that peaked my interest.
I’d like to think that investing has a lot of skill involved and that all the millions of people employed by investment banks, wealth management companies, banks, insurance companies with their MBAs, CFAs, CFPs, etc. have all invested wisely in honing these skills – know what investments to pick and the proper time to buy; and maybe more importantly, when to sell.
A few months ago, I posted about MAKO Surgical – a manufacturer of robotic surgery equipment for knee and hip replacement. The company has been on a roller coaster ride – going from $13 to $45 and back down to $10 over a span of 3 years. The stock price has recently been slowly trending up and closed around $16 yesterday. In the process, I’ve come out even – I sold some stock at a high, but then converted stock to options as it fell. Unfortunately, after buying those options, the stock continued to drop further – with my options losing 95%+ of their value.
Well, today’s surprising news is that medical equipment manufacturer Stryker is buying MAKO for $30 a share! This merger definitely helps MAKO, and may even be complimentary to Stryker’s existing product portfolio – even if this came out of the blue, and at quite a hefty premium given how un-impressive MAKO’s numbers have been over the last while.
So, instead of a likely loss of my entire investment – my options are up 20%. I will likely just hold on to them until the deal passes – on the chance that another competing bid comes in (ala J&J, GE, etc.). This would be unlikely given how much of a premium Stryker paid – but crazier things have happened.
So the lesson of the day: there’s skill, and then sometimes there’s plain old straight out luck – which happened today.