Revisiting My Palm Bet

On April 12, Bloomberg News reported that Palm had engaged Goldman Sachs and Frank Quattrone’s Qatalyst Partners to find a buyer.  Palm closed at $6.04/share that day.  The next morning, I wrote “I’m Betting on a Palm Take Under or Bankruptcy.”   Considering the stock has traded as high as $14 this year, a buyout of $6/share or less would qualify as a take under in my book.   Needless to say, it wasn’t a very popular position.

The news yesterday shows how desperate the situation is becoming.

• HTC Not Bidding for Palm after Reviewing its Numbers
• Lenovo Emerges as Leader to Buy Palm Inc.
• Don’t Bet on Lenovo Saving Palm
• Who Will Buy Palm? If Not HTC, How About HP?
• Palm’s Back-Up Plan If Its List Of Buy-Out Candidates Shrinks To Zero

Eric Savitz, Barron’s, released an article after the close that will have analysts scrambling over the weekend.  He concluded that Palm was worth about $5.09 a share to shareholders after backing out debt and taking into consideration a preferred position of Elevation Partners.  That assumes the company was acquired for $1.2B – a number the company’s advisers had been previously seeking (Reuters).

I am becoming more confident in my stance with each passing day.  Being right is one thing.  Making money while being right is another.  The later is the one I care most about.  I tweeted the following before the close “$PALM will best its low this week w/o a rescue this weekend. $4.50 sounds about right for Mon…”  Let’s see how it plays out.

Palm on Friday closed up 17 cents, or 3.5%, to $5.03.