covering MCK +15%, buying BUD

Over two years ago on the first day of posting this blog we shorted MCK and wrote :

"We've followed this stock for a few years, and feel we know it well enough to be intuitive about it. It looks tired to us, and we expect US markets to do poorly going forward along with a general credit crunch including for McKesson's clients.

On a technical level if it reaches a new 52-week high above $55 we should cover and probably will, perhaps going long."

We were certainly correct about the market, and so too about the stock given its price went above $55 and eventually reached nearly $70 but we never did cover.


In mid-September of this year, when wrote of MCK :

"We're still short, with the stock 12% higher. Not a great call, but we remain optimistic."


Today we finally cover. It took quite some time, and the position caused us some regret along the way, but we are well-rewarded for our patience by the enjoyment of booking another profit while the markets implode.


Speaking of imploding markets, it appears some good deals are emerging due to irrational selling. Bud closed today at $62.92 With an all-cash offer from In-Bev of $70 per share for the stock, and the deal expected to close later this year, we find what appears to be effectively a "sure thing". If for some reason the deal doesn't go through, BUD is a great stock to own in a recession so we like the trade either way.

Read the relevant news here :

News 1

News 2

News 3


Options traders may note that the bid for December $55 BUD puts is currently $3.00 Considering the $70 offer on the table, that seems like a great deal to us.







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