Random news for me today. R.R. Donnelley & Sons (RRD) has a rumor of a takeover bid from Xerox (XRX) today. So that brings us to having to make a decision with our shares. There are 3 basic options: buy more, do nothing, or sell. And remember, doing nothing is a choice.
Our original reason for owning the stock was that they were going to split into 3 companies. In addition, they pay a good dividend. Now, one larger company is rumored to want to eat up all 3 heart pieces, giving them an extra life. (Note to self, this is not the game of Zelda).
Our goal is to buy companies we can own for a long time and collect dividend checks from them. Now that Xerox (XRX) has a rumor to buy R.R. Donnelley & Sons (RRD), this changes the reason to own the company for us. Xerox (XRX) could pay cash for the shares or they could give shares of Xerox (XRX). We have not done enough research on whether we should own Xerox (XRX) or not. We also do not plan on researching them more right now, as I do not have the time. So we do not necessarily want the shares. This leave the other option of getting cash. We do not always get a choice of cash or shares. We do not want the shares right now and who knows if we will get cash.
Rumor and I Sold
We do not want the drama to see if the merger is real or what we will get for it. Therefore, with the jump up in stock price to $19.74, we decided to sell the shares and get our cash now. There is the chance this rumor is just a rumor and our original thesis for owning the stock will be intact. If that happens, maybe we might buy them again in the future. However, we made a small profit in the stock, so that is good.
There was a takeover rumor and I sold my shares. Do you think this was the correct decision? Please feel free to add a comment below.
- XRX – We do not own or plan to own the stock in the next week.
- RRD – We sold all of our shares.