Capital Depreciation

Shares of Capital One (COF) are continuing to fall after news of their nearly $15 billion bid for North Fork Bank (NFB). After hitting new highs at $90 per share, COF stock has dropped more than 10 percent to $80 and change. This sell-off is exactly what we saw after the company announced plans to buy Hibernia a year ago. History tends to repeat itself, and this instance should reinforce that view. Patient buyers will be well rewarded once the deal closes and investors realize how strong of a move it was. Momentum traders and merger arbs are causing longer term investors such as myself to salivate at the stock’s current price.

Enjoy this post? Subscribe and never miss another one: RSS | Email | Twitter

Comments are closed.

Post Navigation