Market Lows Give Me That Sinking Feeling

by: Alex Filonov November 20, 2008 | about stocks: BRK.A / CEG / MSFT / YHOO    

Alex Filonov

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Market broke through October lows yesterday. Just what I was afraid of. Let's see if it goes straight down to 7700.

Steve Ballmer of Microsoft (MSFT) repeated yesterday that they don't want to buy Yahoo! (YHOO) anymore. Surprise! Not for me. In February Microsoft had a lot of free cash to pay for Yahoo! (terms of the deal were half stock and half cash). Not anymore, all that cash is allocated already for a huge buyback. And Mr Softee is not eager to get in long term debt. Damn, I didn't short Yahoo! yesterday because pop was too low to my taste. Well, opportunities are made up easier than losses. Now both companies are in "don't touch" category for me.

Bought some Constellation Energy (CEG) yesterday. This was an arbitrage trade, Berkshire Hathaway (BRK.A) is buying it for 26.50 (all cash) sometime next year. I normally don't do arbitrage, but this one looks as low risk, relatively high reward deal. And while waiting for a deal, I can enjoy 8% yield.

Full disclosure: At the time of publication author had a long position in CEG and didn't have any positions in YHOO, MSFT or BRK.A. Positions can change any time.

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