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Author: [Investments] Topic: AUTH - APPL Buyout Question
FrankShades
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FrankShades
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#1
Posted: 7/27/2012 11:11:37 AM
I have a bunch of shares of AUTH.  My cost basis is roughly in the 4.30 range.  Today I Apple agree to buy AUTH for $8 a share .  So here's the question, it's trading at 8.25 or so now.  Do I just dump the shares or do I wait it out?  I've never been in the situation before personally, so I was wondering what the smart move is here. Would I be foolish to wait it out? Input would be greatly appreciated.
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#2
Posted: 7/27/2012 12:07:14 PM

FrankShades - You're welcome!

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cave0707
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#3
Posted: 7/27/2012 12:07:59 PM
Next stock pick will cost you a pretty penny.
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FrankShades
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FrankShades
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#4
Posted: 7/27/2012 12:38:37 PM
Haha...you're the man! I actually chose this over sime of the other names u threw out there simply bc I know the industry better. I didn't have the available funds to invest in the others. Did u dump this when it got over 8.50 or u still holding? Never been in a buyout situation before so not sure how to play it.
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#5
Posted: 7/27/2012 12:43:21 PM

99% of the time, you simply cash out of the current price and move on.  However I've been tracking this stock for quite awhile and think there's some consideration in holding this stock. 

Corning came out with the Willow Glass this year which is a revolutionary type glass that bends, twists, rolls, curves ... it will be used in ALL next generation smartphones (prolly 2013/2014).  This glass is super thin ... this is KEY ...

The current AUTH biometric sensors cannot be used under the glass unless it's shaved or the glass has to be super thin (no current glass is thin enough) ... you have to physically touch the biometric sensor.  The current sensor has the right size, doesn't drain the phone battery and is reasonably priced.  The problem is the placement.  If this sensor can be placed under the glass, it's almost a guarantee that every smartphone going forward would use this biometric sensor in future NFC phones.  With the development of Cornings Willow Glass, the ultra thin glass allows AUTH sensors to be placed under the glass giving it the clean uninterrupted front design smartphone manufacturers desire. 

To make a long story short, there's a very reasonable chance Samsung counters with a bigger offer in the near future.  Remember Samsung and AUTH just entered a contract for its premier Samsung Galaxy S3.  What happens if Apple buys AUTH?  You think Apple will allow Samsung to buy AUTH sensors going forward ... after their contract expires?  Maybe ... maybe not.  With the AUTH market dominance in biometric sensors, Willow Glass, NFC market potential ... Samsung and/or Broadcom may counter with a better offer.  There's already an article out regarding the opt out fee if AUTH finds a better offer. 

Congratulations on your big score.  You can't lose no matter you do.  Wait or don't wait ... AUTH is a winner winner chicken dinner.

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#6
Posted: 7/27/2012 1:04:44 PM
If it is trading over the offer price, the market thinks AUTH might not go for the deal..so if you agree and think AAPL has to pay more, hold on.

I would think its worth holding and waiting..
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FrankShades
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#7
Posted: 7/27/2012 1:08:31 PM
Thanks for the detailed response. I was thinking Samsung would be almost forced to counter so I figured I might just hold. In reality worst case scenario is $8 a share when all is set and done, right?

Let me know if you're in the NY Metro area I certainly owe u 1.
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#8
Posted: 7/27/2012 1:20:41 PM

With the downside risk being around $8 ... I think it's worth holding.  Or you can sell half ... hold half?!?!   I'm not gunna tell you what I did, don't wanna be blamed for missing out on more profits ... but the hold half, sell half is not such a terrible idea ...

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#9
Posted: 7/27/2012 1:23:40 PM
FYI - also bought some INVN pre earnings!!! Oh my goodness ... two homeruns in one week!  INVN is another beautiful baby with enormous potential!!!  Only if the market can hold up
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FrankShades
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FrankShades
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#10
Posted: 7/27/2012 1:40:26 PM
Cove, thanks for your input. I was thinking about holding. Give that I have a few hundred shares I figured I'd just hold. Plus I'm on here so I'm obviously a gambler. Lol! I honestly was thinking of them as a long term play before this happened. I appreciate the responses from you and Wallstreet. It helped to clarify thing for me. The technology was bound to take off. Congrats on the multi-homer game with INVN.

This def helps for some stocks that have no worked out for me. WWE for example bought in around 8.75 waiting for great Q1 earnings. They posted great earning after the stock had bombed. Shot to 9 then sunk like thr titanic. I'm expecting a similar showing in Q2 then selling. I was only hoping to get to 9.30 or so anyways.

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#11
Posted: 7/27/2012 1:56:01 PM

FrankShades, I know Samsung is the logical choice for the counter offer but I have a suspicion another player like Broadcom may come out with a $10 to $12 per share offer.  Broadcom has been targeting companies similar to AUTH and their CEO said they'd like to buy 2 companies per quarter (in the mobile chip security segment ) .  This AUTH story is getting interesting ... worth a hold fo sho.  It would be great if both Samsung and another big player went into some bidding war.  You may even double up from these prices. 

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FrankShades
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#12
Posted: 7/27/2012 2:02:58 PM
I agree with you 100%!! I figured Samsung at a minimum. My knowledge is more on the software side, but I know for a fact that these companies hate Apple. On the software side many companies joined forces to progressive chip away at Apple's market share. There's almost no way that these companies just let Apple have AUTH, especially at $8 a share. A steal given the upside potential and the need for the technology going forward. Thanks again!
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