The market is indicated to open slightly higher this morning as stocks continue to work to officially come out of their correction. Our Cabot Trend Lines remains positive and the Real Money Index tells us many weak hands have already bailed out, both good signs. But we’re waiting on the Cabot Tides to give a green light before doing any major new buying from here.
The good news is that many individual leading growth stocks remain in good shape, and this morning, we were handed a pleasant gift; Array Biopharma (ARRY), which we bought a half position in on June 7, has agreed to a takeover offer by Pfizer for a whopping $48 per share in cash. As expected, the stock is bidding up north of 47 on the news, which would represent a huge gain of around 60% on the day. Hurrah!
In these unusual situations, there’s always a remote chance that a bidding war flares up that could drive ARRY even higher down the road. But given the fact that the offer seems extremely solid (all cash, 60% premium to Friday’s closing price, etc.) we’re going to follow our usual m.o. in these situations, which is to take the gift.
Thus, we advise selling ARRY and taking your windfall profit; we’ll hold the cash for now, though will be looking to redeploy the proceeds (probably another half-sized position) in another stock in the days ahead. But we wanted to shoot this message out this morning so you had our latest thoughts.