LinkedIn Arbitrage Opportunity?

LinkedIn Arbitrage Opportunity?

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I noticed a strange behavior with regard to LinkedIn stock today. The stock is trading between $191 and $192. This price is a bit strange because Microsoft’s purchase price for LNKD is $196 per share. If markets behaved efficiently the current stock price should be at minimum $196.

I can only find two reasons for the discounted current price. First reason, Microsoft is still waiting for regulators to approve the purchase. I can’t see a reason why regulators will block this sale. The business combination is complimentary and I don’t see it causing anti-competition issues. The second reason, Microsoft may not go through with the sale. Given the amount of cash Microsoft has and this being the CEO’s first major purchase I would expect the sale to go through.

Based on this reasoning, I would buy the stock as long as the price is below $196 and set a sell price for when it hits $196. I consider this as almost a risk less trade.

Two percent guaranteed gain is attractive and I don’t believe the holding period for the stock to hit that price will be very long. My personal view !

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