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Barnes & Noble's Musical Chairs Game Leaves Clues for Investors

The Barnes & Noble tablet liquidation is on a much different trajectory. Based on Amazon's actions, Barnes & Noble miscalculated the discount needed, it doesn't have as many to liquidate, or Amazon enjoys pouring salt in the wound. Amazon is so competitive it won't let the Nook curl up in the corner and die in peace.

BKS Revenue Per Share TTM Chart BKS Revenue Per Share TTM data by YCharts

With all that said, shareholders have an unusually bright spot and motivation to maintain their position. The reasoning why a new CEO wasn't named at the time William Lynch resigned is compelling. It's no secret that Leonard Riggio is interested in taking Barnes and Noble private.

One plausible scenario is it will be easier to recruit quality talent after the uncertainty of a buyout is complete. Another is Riggio wants to take the helm again as a private company, and he is positioning himself now for that role after a takeover.

Either way, if Riggio and or others take Barnes & Noble private, existing shareholders can expect a significant premium from today's trading range. I think Riggio may wish he picked the keyboard to the head instead, but for shareholders, allowing more time to see how it plays out could result in a big payoff.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Robert Weinstein currently blogs, mentors traders, and writes several weekly columns in Rocco Pendola's Option Investing newsletter from his home in northern Wisconsin. Robert tends to focus on the psychological importance of goals, risk mitigation, emotion, and relatively short term market exposure. With nearly 30 years of studying and investing experience, Robert has experienced the many ups and downs in the financial markets and uses the knowledge gained to maintain balance. Robert believes the best way to make money investing is to avoid losing it. The best way to avoid losing is to know what emotional traps lay in the path of investors and learning how to avoid them. Robert is a voracious reader of financial related books often completing more than one book a week while not trading or writing. Robert contributes to his blog at paid2trade.com on a regular basis with an emphasis on studying behavior finance.


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