This post was just published on ZYX Buy Change Alert.
One of the rationales behind buying DG is high probability of an eventual merger between DG and FDO. DG stock fell when Icahn stated that merger has now become more difficult. This was started out as a short term trade but since then the situation has changed. Now this trade should be considered medium term but quantity should be reduced. Previously the call was to accumulate up to 35% of full core position size, the quantity should be decrease to 15% by selling on bounces in the zone of $55.00 – 58.45.
The reason to maintain a small quantity is because one fine morning we may wake up to the news of a merger ad the stock gaping up 10 points.
The plan is to wait patiently and slowly accumulate additional 20% on a dip in the zone of $49 – 52.32. No stops at this time. We are raising the target zone t $70-72.
Depending upon how the situation develops, consider being flexible and potentially ultimately accumulating up to 100% of full core position size.
