A Winning Stock Strategy: Sellon the Rumor

摘要

The surest way to profit from takeover speculation in the stock market is to bet it's wrong. Bloomberg examined 1,875 rumors about pending buyouts of 717 companies from 2005 to 2010 and found a total of 104 of those companies were acquired. While stocks that were the subject of takeover speculation initially jumped, they tended to decline over ensuing weeks. An investor who sold such stocks short-selling borrowed shares in hopes of buying them back at a lower price later—would have earned average profits of 1.2 percent over the next month, an an-nualized gain of 14 percent.