mfs preopen, page-7

Everyone seems to be clouding the issue here. Lets re-establish what happened.

MFS made an announcement regarding Centro's funds which, given the word Centro was in the announcement, caused the market for some reason to panic. Even though there was no possible way it could have been bad for MFS. They were not outlaying any money, they were simply offering to take on some of Centro's funds.

From here, the stock began to be shorted by every insto and his dog, looking to cash in on the panic selling already taking place (check the amount of borrowed stock on this one, its near its maximum levels).

MFS was then forced to make an announcement regarding the merger, more than likely prior to them actually wanting to announce the deal.

Now the market (seeing as this stock is barely covered by anyone) has no idea on how to price it. The value of the bid for the funds management side of MFS (which does not including Stella) is only 30% below the market cap of MFS (which inlcludes Stella), even though Stella represents more than 50% of its revenues.

When people panic in a share market, they behave irrationally. There is no better illustration of this then the trading in MFS over the past 3 days.

This is really a simple takeover play and if CIY are valuing the funds management arm of the business at $1.3b, then Stella is worth at least that as well. Meaning MFS is worth closer to $2.6b. Obviously shareholders will get this value once Stella is spun out so at these levels MFS is very cheap, not as cheap as it was at $3.50, but still very cheap.

It has nothing to do with the MFS board's abilities but rather the lack of coverage and hence understanding of the business itself, that has caused the stock to go haywire. As the stock will now no doubt be on a lot of radars now, it will begin to be priced more efficiently, plus with all the short covering that must be conducted, we will see significant upside from here. It just may take longer to see than in the case of normal takeover bids.