Up until yesterday’s nice pump I had been accumulating. The risk reward looks great and on a probability adjusted basis there is still value.
What I mean by that is I give the chance of the acquisition happening at 80% for a rough price of $3.75. My fall back price is $2.60 with a 20% probability, which combined gives me an adjusted target price of $3.52.
I also think there could be upside in that price as there is a small chance for a bidding war as these are strategic infrastructure assets.
Personally I think a price of around $4 will get the deal done. It looks like a great ST investment setup and in the event it doesn’t close I’d still be a happy long term holder as the medium term looks very positive.
