There is no guaranteed way to earn a profit, but there is one method that makes it a lot easier for investors: Do as the pros do.
Cabela’s confirmed in early October of last year that it has agreed to sell itself to rival Bass Pro Shops. As part of the merger agreement, Bass Pro Shops valued the fishing and hunting equipment chain at $65.50 per share, which represents a hefty 19.2% premium versus its prior closing price.
Cabela’s shareholders smart enough to cash out following the announcement netted an approximate 15% gain in just one day. At the same time, millions of investors were left sitting on the sidelines and staring at their computer screens with envy. But this doesn’t have to be the case; Cabela’s sale process was far from secretive.
Here’s what happened.
Elliott Management, an activist investor who owned a major stake in Cabelas, had been pushing Cabela’s board of directors and management to sell itself. The investor initially disclosed an 11% stake in the company on Oct. 28, 2015, when it argued the stock is significantly undervalued. The significantly undervalued stock price at the time? $39.26 per share.
Elliott Management couldn’t make it any clearer that it wanted Cabela’s to sell itself.All investors had to do was follow Elliott Management’s lead, then sit back and let the market reward patience.
Right now, you could benefit from three other companies that have attracted activist investors: