Is it because they think the deal will not be approved by the bear stearns shareholders. I am confused cos the stock keeps going up….
A vacation timeshare tour is a form of advertising used by many timeshare resorts to encourage individuals to consider purchasing a timeshare ownership or vacation club membership interest. Most timeshare tours consist on the minimum 90-minute product sales presentation of your timeshare holiday resort or product sales center, guided by a salesman, an offer you of some sort of snack or meal, and ending with a person or additional salesmen (and frequently the profits manager) encouraging as well as pressuring for a obtain. The company sending the guest towards the timeshare vacation resort usually receives some sort of referral charge, which has resulted in a large quantity of organizations that provide timeshare tours as an incentive.
In order to go on a timeshare tour, each timeshare resort has a different set of qualifications, usually consisting of age and income and occasionally must be citizens of the country where the resort is located.
Timeshare firms come to a decision which countries they will accept friends and family from. If married or cohabiting as being a couple, each spouses or partners ought to attend. Singles are qualified differently. Guys need to generally be married, even though females can typically get away with becoming single (and from time to time they even reduced the minimum earnings necessity). This really is since from the perception that it’s much easier to market the timeshare to a woman than it’s to a man.
Every vacation resort normally allows a single tour per year.Commonly a timeshare tour is thrown in as either a bonus or even a necessity for buying some product from a company, usually a person that’s vacation connected. Telephone surveys, vacuum cleaner salesmen, and a lot more, present incentives to shoppers who are prepared to listen to them such as a “3 day/ 2 night stay” in Las Vegas, San Francisco, or other common vacation destinations. These incentives are, in reality, a commitment to acquire a timeshare tour.
Journey companies leverage their existing contracts with timeshare hotels to offer you a lot more competitive getaway deals, such as cost-free hotel keep, present tickets, and so forth… These will generally be offered inside kind of your “$99 dollar vacation package”, which will include a several night remain, tickets, and so forth with the necessity that the traveler qualify for and consider the timeshare tour.Some timeshare tours can extend well beyond the volume of time originally quoted for your tour and can require the application of large amounts of pressure by many sales agents. Sometimes, a cost-free benefit will likely be denied or delayed till the guest agrees to pay for from your vacation resort, but this is only the situation when the company seriously isn’t a credible 1.
It doesn’t matter what it’s worth to JP Morgan if some traders think that a white knight will come out of the mists and save the company, then it’s worth more than 2.
This happens often enough to give credibility to the idea. Of course, if this doesn’t happen, some people will lose 2/3 of their money. But if it goes back to 72 then they make 12 times their money. High risk but high payout. I might chance a few hundred shares just for entertainment value.
People are hoping for a higher bid or that stockholders will reject the offer. JPM jumped 10%, suggesting that Bear is actually worth about 10% of JPM + 250M + 6B in transaction costs.
The free market values Bear at 21.5B, but JPM bought it for 250M. They hope it’ll go up – if not, it can only drop to $2.
Its a lottery ticket with limited downside – it could go up to $20 if the deal falls through. People are also buying to cover short positions from Friday.
However, Fortune has a different perspective:
"Why Bear Stearns stock is in orbit
Why is Bear Stearns (BSC) up nearly 70% Tuesday, to a price about $6 a share above its $2-a-share buyout agreement with JPMorgan Chase (JPM)? Two groups are piling into the company’s stock so they can vote in favor of the deal, a trading source tells Fortune’s Roddy Boyd.
The first group is the hedge funds that were selling so-called credit default swaps that protect the purchaser against a possible bankruptcy at Bear Stearns. Spreads on Bear Stearns CDS soared to 1,000 basis points Friday – meaning it cost $1 million to insure against a default of $10 million face value of bonds. Those spreads have since narrowed to around 350 basis points, or $350,000 per $10 million in insurance, in light of the prospect that JPMorgan Chase will take over Bear’s obligations. So a seller of a Bear Stearns credit default swap on Friday, having taken in $1 million in premium, can now turn around and protect himself against a default in Bear Stearns for $350,000. That translates into a $650,000 gain -and the potential profit stands to get bigger as the close of the transaction approaches and Bear spreads move more in line with JPMorgan’s, which are around 115. Those dynamics give hedge funds a big incentive to make sure the deal goes through.
Beyond the credit default swap trade, there’s another group interested in making sure JPMorgan winds up owning Bear Stearns. Holders of Bear Stearns debt want the deal to go through so they won’t end up fighting with other creditors in bankruptcy court over the remains of the firm – the likely outcome if Bear shareholders turn the deal down. And Bear Stearns bonds that recently traded as low as 80 cents on the dollar could soon be worth 100 cents if JPMorgan goes through with its purchase.
So while taking a loss on the stock makes little sense on the face of it, buying at $7 to get cashed out at $2 can pay off if you’ve bet enough money elsewhere."