A 15% gain almost guaranteed

I talked about an arbitrage trade when Onyx was bought by Amgen. It was almost like a guaranteed money one could get. Today, there is another opportunity showing up right now.

Home Federal (HOME) is a small, Idaho-based regional bank. While it is small, it is financially rather solid and it is sitting on a huge amount of cash, over half of its current stock price. That's why another regional bank, Cascade Bancorp, offered to buy HOME worth around $270 million. This is equivalent to $17.83 per share for HOME. But right now, HOME's share price is only $15.31. In other words, there is still about 15% value the market has not yet taken. In you buy HOME today, it is almost guaranteed that you will get a 15% gain by just waiting for the deal to close. Actually there is even another possibility that some other bidder to come in to offer even a higher price for HOME as Cascade is already the 2nd one to outbid another regional bank for HOME. If that happens you will make more money. But of course, don't bet on this as 15% gain is already very good to me with very low risk.