Investing with Rupert Murdoch: Preparing to Just Walk Away
By Ian Cooper
Utterly surprising are the actions of retail investors that believe the $5 billion bid for Dow Jones will go through. But as I’ve said repeatedly, it’s not going to happen. Even Murdoch lost confidence that the deal would happen. Still, the naivety of retail investors gets the best of them, and they buy.
The smart move is to short or buy puts on Dow Jones considering that the DJ stock could easily fall below the pre-offer price of under $40. Says UBS, as mentioned by Bloomberg.com, “News Corp.'s $5 billion bid for Dow Jones & Co. has a 40 percent chance of success and its failure would send the shares tumbling to below their pre-offer price…”
Better yet (for short positions, and put option buyers), according to Bloomberg.com, News Corporation may be preparing to walk away from the Dow Jones bid, as News Corporation becomes “increasingly frustrated” with the Bancroft family’s failure to respond to Murdoch bids.
As voting stands now, 52% of the Bancroft voting shares are opposed to the deal. Even the Ottaway family, whichs owns some 6.2% of the voting shares are expressing disapproval for Murdoch’s bid.
However, with Dow Jones most likely out of the picture, we would not be surprised to see a new Murdoch bid for another financial news site as News Corporation gears up to launch a CNBC-competing business channel this year. Stay tuned to Early Alert Trader for possible Murdoch-receiving bids.
Take care,
Ian L. Cooper, Editor, Early Alert Trader