I am frequently reminded that the biggest mistakes I make when it comes to investing is not holding positions for long periods of time. I wrote about one such situation in an article where I described missing out on 22,000% gains on a position I sold too soon. The recent acquisition of Nuance Communications (NUAN) by Microsoft (MSFT) was another reminder.
I had invested in Nuance several years ago when it was trading in the teens and the stock remained range bound for a number of years on account of lackluster performance by the company. I eventually gave up and sold the position for a small gain if memory serves correctly. By not holding tight, I gave up an opportunity to receive shares in Nuance’s spinoff of Cerence (CRNC) in October 2019 and more importantly gave up on a company that went on to nearly quadruple in price. Hindsight is always 20/20 and it is hard to predict how the future will unfold but holding on tight to a company, especially one that has formed a long base and that you have done the work on, is a lesson that has withstood the vagaries of time.
The day after the acquisition of Nuance was announced, the stock still offered an attractive 7.2% spread on the deal. While the spread has now narrowed to 5%, it is still more than one would expect for an all cash deal in a yield starved market.
Merger activity increased last week with six new deals announced and five deals completed. You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.
There were no new deals announced in the Deals in the Works section last week.