Comments on: BCE – A Buying Opportunity? http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm Building Wealth through Saving and Investing Sat, 21 Nov 2009 03:00:37 -0500 http://wordpress.org/?v=abc hourly 1 By: cannon_fodder http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-61982 cannon_fodder Wed, 26 Nov 2008 18:09:44 +0000 http://www.milliondollarjourney.com/?p=573#comment-61982 You could look at it this way... the stock is valued based on fundamentals. The upside is that the deal goes through (although unlikely and probably at a much lower price than originally set) or the deal doesn't go through, BCE declares a reinstatement of some dividend and the stock gets a pop upon that news. Either way, probably worth taking a look at... You could look at it this way… the stock is valued based on fundamentals. The upside is that the deal goes through (although unlikely and probably at a much lower price than originally set) or the deal doesn’t go through, BCE declares a reinstatement of some dividend and the stock gets a pop upon that news.

Either way, probably worth taking a look at…

]]> By: FrugalTrader http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-61974 FrugalTrader Wed, 26 Nov 2008 16:59:33 +0000 http://www.milliondollarjourney.com/?p=573#comment-61974 wearyBear, I'm happy that I didn't buy into this one. :) As of today, they are predicting that the deal will not be completed by Dec 11th and there is even speculation that the deal will fall through. wearyBear, I’m happy that I didn’t buy into this one. :) As of today, they are predicting that the deal will not be completed by Dec 11th and there is even speculation that the deal will fall through.

]]> By: wearyBear http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-61973 wearyBear Wed, 26 Nov 2008 16:57:07 +0000 http://www.milliondollarjourney.com/?p=573#comment-61973 And today? And today?

]]> By: Long BCE http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-55776 Long BCE Tue, 07 Oct 2008 20:03:46 +0000 http://www.milliondollarjourney.com/?p=573#comment-55776 The spread between the expected closing price of 42.75 and now is ridiculous. I put in a buy order this morning for 32.73. That's over a $10 spread. The risk is the deal could still fall through but the risk reward at this point 2 months away was too good to pass up. If the deal doesn't go through, the stock will likely drop some more but BCE is a buy and hold type of stock anyway. What do you think? The spread between the expected closing price of 42.75 and now is ridiculous. I put in a buy order this morning for 32.73. That’s over a $10 spread. The risk is the deal could still fall through but the risk reward at this point 2 months away was too good to pass up.

If the deal doesn’t go through, the stock will likely drop some more but BCE is a buy and hold type of stock anyway.

What do you think?

]]> By: Sarlock http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-43188 Sarlock Thu, 10 Jul 2008 02:00:42 +0000 http://www.milliondollarjourney.com/?p=573#comment-43188 Cash will be steadily eroded by inflation over the next few years. Cash will be steadily eroded by inflation over the next few years.

]]> By: MEG55 http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-43159 MEG55 Wed, 09 Jul 2008 21:49:23 +0000 http://www.milliondollarjourney.com/?p=573#comment-43159 The smart investors will keep the BCE money in cash. This bear market will not turn around for a few years. The smart investors will keep the BCE money in cash.

This bear market will not turn around for a few years.

]]> By: Tax & Financial Planning http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-43143 Tax & Financial Planning Wed, 09 Jul 2008 19:42:26 +0000 http://www.milliondollarjourney.com/?p=573#comment-43143 You know the other day I heard someone ask where the money that get's released after the BCE deal closes will end up. Some though MTS others thought it would just get absorbed by the market. But it's a lot of cash and it has to land somewhere. You know the other day I heard someone ask where the money that get’s released after the BCE deal closes will end up.

Some though MTS others thought it would just get absorbed by the market. But it’s a lot of cash and it has to land somewhere.

]]> By: Cannon_fodder http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-43093 Cannon_fodder Wed, 09 Jul 2008 14:21:32 +0000 http://www.milliondollarjourney.com/?p=573#comment-43093 There is something in my memory that says the stock wont actually get to the $42.75 price. There will be a slight discount to the target price. it might be only 5 cents or so, but IIRC other situations like this didn't translate into the exact acquisition price. Perhaps it is because no one would be willing to buy them at $42.75 + commissions - where is the profit? There is something in my memory that says the stock wont actually get to the $42.75 price. There will be a slight discount to the target price. it might be only 5 cents or so, but IIRC other situations like this didn’t translate into the exact acquisition price.

Perhaps it is because no one would be willing to buy them at $42.75 + commissions – where is the profit?

]]> By: Dividend Growth Investor http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-43088 Dividend Growth Investor Wed, 09 Jul 2008 14:12:17 +0000 http://www.milliondollarjourney.com/?p=573#comment-43088 I found an interesting article on Yahoo finance about this deal: http://biz.yahoo.com/rb/080704/e.html?.v=3 Seems like the break up fee is 1-1.2 bln $ CDN. If you really believe that the deal would go through and you would like to use leverage, why not buy the January 2009 40 calls @ 1.90 and then sell them at 2.75 for a huge profit? http://www.m-x.ca/nego_cotes_in_en.php?symbol=BCE&insSymbol=BCEA09C40.00&fixeDate=&#cote Another thing to do if you are buying the stock now and wait until Dec 11, 2008 is to sell covered calls against your position. I found an interesting article on Yahoo finance about this deal:

http://biz.yahoo.com/rb/080704/e.html?.v=3

Seems like the break up fee is 1-1.2 bln $ CDN.

If you really believe that the deal would go through and you would like to use leverage, why not buy the January 2009 40 calls @ 1.90 and then sell them at 2.75 for a huge profit?

http://www.m-x.ca/nego_cotes_in_en.php?symbol=BCE&insSymbol=BCEA09C40.00&fixeDate=&#cote

Another thing to do if you are buying the stock now and wait until Dec 11, 2008 is to sell covered calls against your position.

]]> By: Al http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-43076 Al Wed, 09 Jul 2008 13:01:31 +0000 http://www.milliondollarjourney.com/?p=573#comment-43076 FT, I've been considering selling part of my holdings in BCE (though not exactly half, I've got an odd lot situation due to the spin off of Bell Aliant.) I'll probably end up sitting tight and waiting for Dec. I'm getting bearish on the TSE so I might as well take the positive return on BCE instead of a negative return on anything else I may buy. FT,

I’ve been considering selling part of my holdings in BCE (though not exactly half, I’ve got an odd lot situation due to the spin off of Bell Aliant.) I’ll probably end up sitting tight and waiting for Dec. I’m getting bearish on the TSE so I might as well take the positive return on BCE instead of a negative return on anything else I may buy.

]]> By: Sarlock http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42999 Sarlock Wed, 09 Jul 2008 01:55:35 +0000 http://www.milliondollarjourney.com/?p=573#comment-42999 Way I see it, part of that 8.2% spread is the opportunity cost of locking up your cash for a 6 month investment (so 2-4% or so, depending on what your average annual stock yield expectations are) and the other 4-6% is the risk factor that something, however unlikely, blows up and the deal goes sour and your investment drops down to $30-35 (or more, given current market conditions). Free money? Maybe... but I'd rather put my money elsewhere where I have a higher potential upside. This likely explains some, if not all, of the current spread. The spread will slowly narrow as we come closer to the date. Way I see it, part of that 8.2% spread is the opportunity cost of locking up your cash for a 6 month investment (so 2-4% or so, depending on what your average annual stock yield expectations are) and the other 4-6% is the risk factor that something, however unlikely, blows up and the deal goes sour and your investment drops down to $30-35 (or more, given current market conditions). Free money? Maybe… but I’d rather put my money elsewhere where I have a higher potential upside. This likely explains some, if not all, of the current spread. The spread will slowly narrow as we come closer to the date.

]]> By: Finance_Addict http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42944 Finance_Addict Tue, 08 Jul 2008 16:50:04 +0000 http://www.milliondollarjourney.com/?p=573#comment-42944 I don’t buy into the noise, fear or uncertainty what so ever that the deal dies between now and Dec 11th. If the banks were to walk away (which they never could) without a huge penalty and lawsuits, they would have. The banks got their concessions and basically a $2 cut in price with the suspended dividend. It’s a done deal. This is a rare opportunity to get a nice spread on a all cash commission free sale of your shares. I find it much riskier to buy basically any other stock right now than to wait for Teachers to buy my shares. Buying with borrowed money does take the shine off the return but still I make money with the banks money. As for BCE after the sale, Teachers will clean it up and put it back on the market in a few years. I don’t buy into the noise, fear or uncertainty what so ever that the deal dies between now and Dec 11th. If the banks were to walk away (which they never could) without a huge penalty and lawsuits, they would have. The banks got their concessions and basically a $2 cut in price with the suspended dividend. It’s a done deal. This is a rare opportunity to get a nice spread on a all cash commission free sale of your shares. I find it much riskier to buy basically any other stock right now than to wait for Teachers to buy my shares. Buying with borrowed money does take the shine off the return but still I make money with the banks money. As for BCE after the sale, Teachers will clean it up and put it back on the market in a few years.

]]> By: Nicolas http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42941 Nicolas Tue, 08 Jul 2008 16:19:13 +0000 http://www.milliondollarjourney.com/?p=573#comment-42941 As a client , like a lot of people, I've never liked BCE. On the other hand, I've always had a lot of respect for Teacher's. They have proven over time that they can make quality acquisitions and obtain decent returns for their members. Not much others could try something like this and perhaps even succeed. They are the ones we should look at when judging this transaction. As a client , like a lot of people, I’ve never liked BCE. On the other hand, I’ve always had a lot of respect for Teacher’s. They have proven over time that they can make quality acquisitions and obtain decent returns for their members. Not much others could try something like this and perhaps even succeed.

They are the ones we should look at when judging this transaction.

]]> By: 45free http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42936 45free Tue, 08 Jul 2008 15:21:24 +0000 http://www.milliondollarjourney.com/?p=573#comment-42936 If I were looking to buy BCE right now, I would look to the options market. Here is how that trade might look. BCE currently trading at 39.00. If the deal falls through, this probably slides to 32, around where itwas trading pre takeover offer. Assume you were to buy 100 shares, you have 375 of upside and 700 of downside. Take that same $700 and buy 4 Jan 2009 $40 call opions at 1.75. This gives you exposure to 400 shares above $41.75 ($40 strike + $1.75 premium). Upside is $400 (42.75-41.75)*400 and downside is $700 so pretty much as being long stock but tying up (and risking) $3,200 less capital. If I were looking to buy BCE right now, I would look to the options market. Here is how that trade might look. BCE currently trading at 39.00. If the deal falls through, this probably slides to 32, around where itwas trading pre takeover offer. Assume you were to buy 100 shares, you have 375 of upside and 700 of downside. Take that same $700 and buy 4 Jan 2009 $40 call opions at 1.75. This gives you exposure to 400 shares above $41.75 ($40 strike + $1.75 premium). Upside is $400 (42.75-41.75)*400 and downside is $700 so pretty much as being long stock but tying up (and risking) $3,200 less capital.

]]> By: AndyBuck http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42934 AndyBuck Tue, 08 Jul 2008 15:18:06 +0000 http://www.milliondollarjourney.com/?p=573#comment-42934 FT, I believe there is actually a $1 Billion penalty. It went up $200 million after the last round. All the gushy lawyer-ry details here: http://www.bce.ca/data/documents/definitive_agreement_en.pdf FT, I believe there is actually a $1 Billion penalty. It went up $200 million after the last round.

All the gushy lawyer-ry details here:
http://www.bce.ca/data/documents/definitive_agreement_en.pdf

]]> By: longtimereader http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42933 longtimereader Tue, 08 Jul 2008 15:12:49 +0000 http://www.milliondollarjourney.com/?p=573#comment-42933 There are 150+ days to Dec11, God knows what will happen again to BCE -- shareholders might lauch lawsuit for the skipped dividends :-) okay I was kidding . Anyway, I put a limit order to sell all my holdings @ $40,hopefully it will get filled by the end of July, to me , the extra 2.75 + commission fee don't worth the uncertainty ... There are 150+ days to Dec11, God knows what will happen again to BCE — shareholders might lauch lawsuit for the skipped dividends :-) okay I was kidding . Anyway, I put a limit order to sell all my holdings @ $40,hopefully it will get filled by the end of July, to me , the extra 2.75 + commission fee don’t worth the uncertainty …

]]> By: FrugalTrader http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42931 FrugalTrader Tue, 08 Jul 2008 14:55:48 +0000 http://www.milliondollarjourney.com/?p=573#comment-42931 Al, what you could consider is selling half now and half later. That way, you lock in some profits and take money off the table. Al, what you could consider is selling half now and half later. That way, you lock in some profits and take money off the table.

]]> By: Al http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42930 Al Tue, 08 Jul 2008 14:51:24 +0000 http://www.milliondollarjourney.com/?p=573#comment-42930 I've owned some shares of BCE for a few years and have been watching the whole thing with fascination. I voted in favour of the buyout of course. I have no intention of buying more at this time (I'm not nearly as optimistic as the addict), but I am struggling with the sell side of the equation. Should I sell for $39.xx to lock in my profit? I’ve owned some shares of BCE for a few years and have been watching the whole thing with fascination. I voted in favour of the buyout of course. I have no intention of buying more at this time (I’m not nearly as optimistic as the addict), but I am struggling with the sell side of the equation. Should I sell for $39.xx to lock in my profit?

]]> By: FrugalTrader http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42929 FrugalTrader Tue, 08 Jul 2008 14:24:43 +0000 http://www.milliondollarjourney.com/?p=573#comment-42929 TMW, thanks for the info. I didn't know that there was a $200 million penalty for walking away. ETF, I would say that by the time December rolls around, the spread will be very small. TMW, thanks for the info. I didn’t know that there was a $200 million penalty for walking away.

ETF, I would say that by the time December rolls around, the spread will be very small.

]]> By: ETF Income http://www.milliondollarjourney.com/bce-a-buying-opportunity.htm/comment-page-1#comment-42927 ETF Income Tue, 08 Jul 2008 14:12:10 +0000 http://www.milliondollarjourney.com/?p=573#comment-42927 Why don't we wait for beginning of December to buy BCE, then we can gain more interest by invest somewhere else during this period. Why don’t we wait for beginning of December to buy BCE, then we can gain more interest by invest somewhere else during this period.

]]>