By Nigam Arora & Dr. Natasha Arora
Signal Limited is a Signal(s) with a great record in similar situations but does not meet all of the stringent criteria for a Signal. Typically Signal Limited has higher risk-reward compared to a Signal over the short term.
The Company
Stratasys (SSYS) is a 3D printing company. Stratasys sells digital manufacturing systems for use in aerospace, electronic, automotive, medical, industrial, and consumer products. It also manufactures 3D printers and supplies the accompanying materials and software.
The Buyout Offer
Nano Dimension (NNDM) had previously made a buyout offer for Stratasys. Stratasys had rejected the offer. Now, Nano Dimension is making a revised offer of $19.55 per share in cash. SSYS is trading at $15.97 as of this writing. The big difference between the buyout offer and the stock price of SSYS indicates that the market does not believe that Stratasys will accept the offer. However, if Stratasys does not accept the offer, it is going to come under increasing pressure to either have a plan that will increase its stock price or to sell itself to the highest bidder. Herein lies the opportunity based on probability adjusted risk reward basis.
Track Record
To date, 177 Arora Portfolio companies have been bought out, producing a fortune for long time members. This track record is better than boutique firms charging $50,000 per year. Of course, The Arora Report offers several more edges to investors in addition to buyouts.
Zones
This call is suitable only for those who are able to accumulate over a wide range. The initial buy zone is 🔒 (To see the locked content, please take a 30 day free trial).
The maximum recommended size is 15%. Consider accumulating in small tranches. Please see the Trade Management Guidelines to learn how to scale in. Scaling in is a technique used by billionaires and hedge funds that can increase your rewards and reduce your risks dramatically.
If a bidding war erupts, the buyout price can be in the zone of 🔒.
The mental stop zone is 🔒. However, depending upon what the stock market is doing, it may make sense to only reduce the quantity, instead of totally exiting, and accumulate this stock for the long term in case a buyout offer does not materialize.
Caution
As always, there is no guarantee that a buyout will occur. If a buyout does not materialize, there is significant risk in this position. The stop zone may not protect you as the stock can gap down. For this reason, it is important to control the position size. When you learn to control the position size, it gives you an important edge in the stock market. The Trade Management Guidelines will help you learn how to control the position size.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
