Recently we have invested in Rohm and Haas Co. This was a merger acquisition of a chemical company we believed would benefit the acquiring company (Dow Chemical) immensely. Because of the profitability of our investment in ROH, we have sought out other acquisition deals. One we have come across was the recent announcement of Puget Sound Energy (PSD) being acquired.
We have done our due diligence about the follow through of the acquisition, and have decided this is a deal that will go through at a high rate. We feel investing in this company will result in roughly a 7% gain. Although this seems to be a risky investment, we feel the probability of this falling through is extremely minimal. Therefore, after putting in the research to validate this claim, we have decided to make an investment into PSD.
Currently we are waiting for the price of PSD to decline a little to maximize our gain off of this acquisition, yet allowing the market to go down as a whole to maximize our investment in DOG, a PowerShares short of the DOW. We plan to liquidate our current holding of DOG and reinvest this money into PSD. This will hopefully allow us to take full advantage of the declining DOW and take that money to capitalize on the appreciation of the full buyout of PSD.
In conclusion, we hope to take advantage of the appreciation of PSD after we have taken our gains from DOG. Currently we sit at a 2% gain on DOG and hope to find an increase within the next few days, with weak guidance on forcasted earnings from companies about to announce earnings (ie: Alcoa - AA). Our hope is to capture a 4% profit on this hedge trade and reinvest in what we have defined as a more than probable deal of going through.
We are open to any comments or feedback you might have on our outlook/research.
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