I have a reasonable explanation for this that doesn’t involve doom and gloom. However, the inner workings of business deals are absolutely not things I know anything about, so perhaps someone in the know can correct me where I’m wrong, or confirm if I might be on the right track.
Financial deals take time. They’re messy. Heck, when I bought my house over a decade ago, and when I re-financed 3 years later (pre-Rocket Mortgage), there was a lot of paperwork involved, and multiple visits to go over and sign documents. And that’s just a house. I can’t even imagine what’s involved to acquire a company.
How long does that take? One month? Two months? At what point does the selling price get set in stone? (Asking because I really have no idea.)
LVGO was $77 a month ago. It was $57 two months ago. Maybe the deal was made with the LVGO folks not thinking that they’d be getting not a 10% mark-up in share price, but a 100%+ mark-up? Perhaps some of the run-up in price over the last month is due to knowledge of this deal leaking? Or it’s unrelated, but bad luck for LVGO, in hindsight.
Of course, you can argue such a merger is smart, due to LVGO’s 100% YoY growth. But even if it’s not optimal, there are explanations for why they might want to, assuming they thought they’re getting a ~100% mark-up. It’s like why people take the lump sum after winning the lottery. Or maybe they think that together, they’ll be able to build the most dominant largest telehealth player in the country together.
I also have mixed feelings about this, and am not sure how much of my LVGO (4th largest position at 12%) I’ll keep. But here’s what I know for sure: I’m going to wait to see what Bert says about this. These kind of things make the price of his TickerTarget newsletter more than worth it.
P.S.: Portfolio management (should I sell before or after the merger) are OT!!! So are questions about what happens to your shares. Please don’t ask any others, and if you reply to them, do so off-board. Thank you!