(The following article was originally sent as an alert to subscribers of Stocks Under $10.)
NEW YORK (Real Money) -- Stocks Under $10 model portfolio holding Martha Stewart Living Omnimedia (MSO) was up nearly 8% at around 2:30 today, adding to Thursday's 26% gain and recently changing hands around $6.95.
We'd like to share our thought process behind how we will look to manage this position in the near term, as takeover speculation is swirling.
While we never buy stock solely on takeover speculation, mergers and acquisitions occur regularly, particularly in the under-$10 universe. It's important to know that for every deal that gets done, another four or five are speculated about. And not all takeovers are created equal.
When analyzing a potential takeover, we believe it's important to list all of details you know, as well as what you don't know and then consider the company's leverage to the composition of the overall portfolio.
In the case of MSO, the stock was halted late on Thursday afternoon, when more traders were watching the U.S. Open or daydreaming about a weekend getaway than actively trading. The stock jumped a quick 12% and the New York Stock Exchange volatility curbs kicked in until the specialists were able to get the trade order book under control.
By the time the company resumed trading several minutes later, the shares were now up 20% to $6 and we'd seen that Dow Jones had reported that Martha Stewart was near a deal to be acquired by Sequential Brands (SQBG). No financial details were offered.