I wonder if this write-down is needed painful medicine to get this ailing company back on its feet? I was curious to what happened to other companies after they took major write downs. Almost exactly 2 years ago, Hewlett-Packard took an $8.8 billion write down. Today, its stock is up almost 200%. Very few people made that call in November 2012. I know HPQ is in a different business with different dynamics, but has anyone ever studied what happens to a company's stock in the wake of a major write down? Of course, that would have no relevance to short-term traders, but I am a long-term investor. My biggest fear with CLF is bankruptcy. But would Casablanca be willing to take a huge loss on its investment? It would seem it would do whatever it can to keep out of BK. Or, could it do a pre-arranged BK with the backing of its creditors, like LEE did, in which equity holders weren't wiped out?
I was thinking along the same lines. They'll probably wait for the stock to get to $19 before they start buying.
You are absolutely correct. Shame on AZN management. Management put its own selfish interests ahead of its shareholders
You shouldn't be a shareholder of any company if your prime concern is that jobs are not lost. For example, if some of AZN's drugs in the pipeline turn out to be duds, you can bet jobs will be cut. But a board that snubs a 45%-premium offer is not living up to its fiduciary duty to shareholders. Plain and simple. Consider Yahoo! Six years later, its stock price in inflation-adjusted dollars is still not as high as what Microsoft offered. Yes, if Yahoo! had done the right thing and accepted the offer, some jobs, at least short-term,might have been lost, even before the Great Recession hit. At the same time, more job opportunities may have been available longterm, by being part of a larger organization.
I bought AZN in 2011. It was up 53% from my purchase price before the buyout offer. That equates to 17.67% gain each year. In 2013, it slightly under-performed the S&P 500. Even if the relatively strong appreciation continues, which I doubt, AZN was offered 2.5 times the annual appreciation of the past three years. I'll keep holding it and if it drops by a huge amount, which doesn't seem likely, I'll buy more. Still, I would have preferred if it had accepted the offer. Realistically, it could be a number of years before it hits $92, as I don't think it will continue to rise 18% a year.
When a company offers a 45% premium to where it is trading today, it should take it. Just ask the shareholders of Yahoo! Inflation-adjusted, the price still hasn't reached what Microsoft offered for it.
I hope that is right. I started acquiring CLF in February and I am still way under water. I wouldn't be surprised if the stock dips tomorrow, as speculators take profits. As a long-term investor, I am more concerned where it will be in five years.
Sentiment: Strong Buy