THQ and the acquisition thesis

But, let's look at the other side of the argument. Video games should be a great business over the long term. THQ has some interesting properties in its portfolio (e.g., Saints Row, Destroy All Humans!). And best of all, as of Friday's close, it had a market cap of less than $500 million. THQ is a lot cheaper than it was three years ago.

I have no idea when THQ will be acquired. I do, however, feel quite certain that it will be bought out at some point (of course, keep in mind, that's just my personal speculative opinion). The way I see it, THQ is just too cheap to be ignored. Even though the company definitely needs a lot of work, I know that some bigger entity out there wouldn't mind having access to the publisher's brand.

As the economy improves, and as CEOs begin to feel increasingly comfortable, more deals are sure to materialize. Still, you've got to be very, very cautious when buying on this kind of speculation. It's not for every investor. If you do believe that THQ might be a takeover target, and you make the decision to roll the dice by acquiring shares of the company, then only use capital dedicated to risk. And I mean big risk. Fundamentally, THQ isn't a solid buy. Acquisition potential, on the other hand, is compelling in this case.

Disclosure: I don't own any company mentioned; positions can change without notice.