Trading a company that being take-over

HPI (7919)

On 16/Jun/2011, HPI announced that she is being take-over by Oji Paper Sdn Bhd for an offer of RM4.40 per share.  Her price was immediately being jacked up & open at RM4.26 (from 3.93) but closed lower at RM4.18 (Down by 8 sen).

Those who bought her before 16/Jun gain an significant amount, I'm one of the lucky one who bought her at 3.68. I was hesitating whether to sell on that day but then I decided to let her fluctuate for a few days to see how her price moves. After a few days trading, her price has risen back to around 4.25 there and slowly going up bit by bit , around 1 sen in a few days . Then I decide to hold till the whole take over process and have my capital + profit (RM4.40 per share) returned back to me without me selling (MIB only charge me RM5 for the transaction process, so I say I save a bit on the brokerage charges). She was delisted on 23/Aug/11 at last traded price 4.36.

So, with a patience of 2+ months, I earned extra of RM0.14 per share compared if I were to sell at 4.26 on 16/June. About 3.3% additional gain for a 2+months (annualized = 13%), I would say worth the waiting .

Leader (4529)

On 18/Oct/11, Leader announced that she is being take over by HNGC for an offer of RM1.10 per share.
She gap up & open at RM1.02 (from RM 0.84) but again closed lower at RM0.985. This time I'm not so lucky, as I did not have any share on hand before the announcement.

Well, she behave a little bit different from HPI, her price continue going down for a few days before stabilising at RM0.95, then on 2/Nov evening , her directors send out an acceptance letter to accept the offer, and then next day, she gap up to RM0.98 and been stabilising at this price till now. Well, the whole take over process will be completed once majority of the shareholder accepted the offer. So, there is still around 12% meat left for this shares. Is it worth to invest ? I would say yes, for a 12% gain, with the only risk that HNGC did not get a majority approval. Given the price stability movement, I believe the success rate of the take over is quite high. Time will tell whether Leader will be a successful trade or not. Lets see.

Price movement after "take over" announcement is one of the indicator to watch
To predict the chances of a take-over success probability. One of the example is Latexx being announce of a take over offer on 2/Feb/2011 but the price keeps going down  for 1+ month before stabilising but then also the price is still slightly erratic. Lastly, there is an announcement on 16/May/2011 that the take over has failed.