GREY:MLKKF - Post by User
Post by
24~Karaton Oct 26, 2007 9:57am
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Post# 13695643
Assessing the Cost
Assessing the CostOver the past six months, the two premier molybdenum stocks in the TSX Global Market Index, Thompson Creek and Mercator Minerals, have closely tracked one another’s market performance. To be sure, there will always be unique characteristics possessed by each of the two companies that will distinguish them from one another, but in general, the market’s verdict is that they, together, are at the top of their class. (The chart below demonstrates this six-month trading activity).
In contrast, the chart at the bottom shows the activity in ML and TCM over the past five days, and a wide divergence is apparent.
Markets are complex mechanisms, and are forward-looking to a significantly greater extent than is commonly appreciated. It would appear that, at this time, the market is discounting a further increased bid by ML for TYS, of approximately $1.25 per share.
The stock has already paid a huge price for its perceived future growth that may occur as a result of this transaction.
But enough is enough. Anything beyond what the market is currently discounting as an additional premium for TYS is should be considered excessive.
If, in fact, the offer were completely withdrawn, ML would immediately rally by about 10% to 12% in price.
