November 25, 2022

I-Robot IRBT Merger Arbitrage

As it still stands I-Robot (IRBT) is being acquired by Amazon (AMZN) for $61 per share in an all cash deal. The announcement was back in early August of this year. I-Robot stockholders have officially approved the merger with Amazon.

To analyze the opportunity here let's begin with the deal itself. All cash deals always have a higher likelyhood of going through and this one is approved by shareholders. So we have one checkbox marked off. Next is the spread worth it? With IRBT stock currently at $52.57 a share and the deal price being $61 we currently have a whopping 16% return. The next hurdle is the possiblity of regulatory action denying the merger. There is a lot of speculation this deal won't make it past regulatory approval. I remember when there was a lot of speculation on the Fitbit merger being blocked as well and it ended up going through anyway.

I think it is worth averaging into IRBT stock in small increments over coming weeks. The stock is down a lot and could just rise with the overall market even it doesn't get bought. So, I see the risk/reward being nice here. Artificial intelligence is forecast to be one the fastest growing markets over coming years. With the likelyhood of significant innovation IRBT will no doubt be a great company going forward.
irbt chart

November 23, 2022

Stock Market Rally Continues

Since my recent posts about the market rally the major indices have held a steady uptrend. What I am seeing now is bonds especially in the ETF HYG actually "leading" equities higher. This happens from time to time in history. TLT and government bonds are leading too. I've been on Twitter a good bit and I am surprised more people are not paying attention to this. You heard it here. The bull momentum in many sectors is strong escpecially pivotal sectors like homebuilding and construction. This is seen in ETF's VNQ XHB.

I now see stocks continuing to move higher after the economic data is currently being shrugged off. A slow grind higher seems to be in the works. Even QQQ is acting bullish. I always stay open-minded and seperate fundamentals from trend when need be as we are seeing now. I learned in 2009 often major bottoms begin and continue on bad economic data and bad corporate news. Fighting an uptrend is futile. The market is always forward looking. Here are some charts to add a little clarity to the bullish sentiment.
hyg stock
qqq chart
vnq chart
xhb homebuilders chart candles