This has to be one of the most bizarre situations in the history of markets. Rarely, do I agree with the BS that comes out of Cramer's mouth, but let's see EMC has ~ $40B of VMWARE stock EMC has ~ $45B market cap
Either EMC as a standalone w/o VMW is worth ~ $5B or the price of EMC is too cheap, or the price of VMW is too expensive.
Can someone else come up with another explanation?
I am not sure which way this will go, but I am gonna bet EMC w/o VMW is worth much more than $5B, and therefore must short VMW and go long EMC until the relative valuations make some sense.
Thank goodness that the market does become rational. The relative trade of long ~6.3 shares of EMC for each short share of VMW is proving to be very correct. Everyone buying VMW on naked and unsubstantiated potential (they make VIRTUALY(LOL) no money) should really reconsider their position and only buy this pig through EMC, where there may be some value. My $.02.
Valid point, but for arbitrage valuations this far out of balance, I believe the correction will come sooner than that. If I were EMC, I would take my $40B ASAP as it represents the best investment they could ever make! Also, there is always risk in this area that if they do not sell, then someone else will develop a great competitive product and there goes the $40B.