I decided to sell my position in Take-Two Interactive (NASDAQ: TTWO) today. I obviously wanted to take advantage of the nice jump in the share price following the buzz over the all-cash offer from Electronic Arts (NASDAQ: ERTS). As I write this, Take-Two's stock is up 52% from its previous closing value, and up somewhere around 29% from the price I paid near the end of 2007 for the stubs that I just dumped.
My reasoning is simple. I purchased Take-Two ahead of the expected stock appreciation that would occur in the months preceding the Grand Theft Auto IV release in April. Also, I felt that the company was improving and moving beyond the problems it experienced with corporate governance issues in the recent past. Well, with the significant move in the value of my shares in a relatively short period of time, and with the uncertainty regarding this deal, I decided to take the money and see if the funds might be better invested elsewhere. I don't necessarily want to be in the middle of a takeover battle; I'm sure shareholders of Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO) aren't the most content investors on earth right now.
Do I think Take-Two might be able to negotiate a better offer? Yes, I do. But I own Activision (NASDAQ: ATVI), and I am satisfied with playing the videogame sector via its shares for now. And I can always look at Take-Two after things settle. I believe selling Take-Two was the right decision for my portfolio.
Disclosure: I sold my entire position of Take-Two shortly before writing this, and I own shares in Activision.
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Reader Comments (Page 1 of 1)
2-25-2008 @ 4:58PM
WeSeed Editor said...
Nice job, I would've done the same thing. A 40–50% jump like that coming out of nowhere is nothing to sneeze at. Did you know about the rumors of this that came out since December or were you banking exclusively on GTA's success?
www.weseed.com
2-25-2008 @ 9:01PM
Arthur Brunn said...
I also sold my entire position today for many of the same reasons; primarily though I was anticipating the stock's appreciation closer to GTA4's launch and was impressed with their expanding IP portfolio outside the GTA franchise.
Those buying TTWO today are banking on a better deal and I don't think there is much more upside to be had. I really don't beleive EA will increase their offer substantially, at least not enough for me to turn down $27 today.