Monday, June 21, 2010

BVF a winner for the nimble

Biovail. Never heard of it. Not until earlier today. Premarket, news came out about Biovail merging with something called Valeant Pharma. Valeant would keep its name while Biovail got a 15% premium.

Biovail (BVF), which closed yesterday at 14.60, opened at 15.61. I remember it trading at 15.30 or so in premarket. I remembered way back when Chrysler merged with Daimler. That was some crazy, good action for traders. But being sleepy at 3 am Hawaii time, I put my head on a pillow and crashed out.

BVF closed just one cent off its high at 16.67, up 14.18% for the day and concluding its move to the aforementioned premium. It traded 26.7 million shares, well above its average of 1.8 million. Slightly remarkable considering the all-day fade for the rest of the market. I never felt comfortable with the idea of trading something I'd never heard of, not that it stops a lot of traders. I'm content, but it's worth noting that this stock moved more than 6% after it opened. A buy then with a trailing stop might have worked. Maybe not. Shares went from the 15.61 open to over 16.50 just 30 minutes after the open, then sold back down below 16 before making a gradual ascent to the close.

The ship has passed. Congrats to BVF traders.

BVF 1-day chart (5-minute bars)

Here's today's chart on American Italian Pasta Company (IAPC), which accepted a buyout from Raycorp with a 27% premium. Unlike BVF, though, there was no chance after the open to pickup shares for a quickie profit. It was already at 52.63, a 26% premium. 

IAPC 1-day chart (5-minute bars)

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