SHREVEPORT, La., March 20, 2007 (PRIME NEWSWIRE) -- Don Harrold says there are reasons to like stocks like Servicemaster (NYSE:SVM), Ford Motor (NYSE:F), Intel (Nasdaq:INTC), and Microsoft (Nasdaq:MSFT) short term but caution is still the word of the day. "Servicemaster's stock was up today. The news? A buyout where stockholders will get roughly $15.62 per share. That's a premium of 12.47% on the day. Not bad, you might say. But, I disagree," says Mr. Harrold.
"Servicemaster is another stock being bought by 'Private Equity'. Another company where the stock price is down over the last 7 years -- since the previous 'all-time highs', and investors get a pittance on the money they invested for the long term," adds the Wall Street maverick.
"Certainly 12.47% in a day is a wonderful trade. However, tell that to the folks that held Servicemaster stock for the last few years with the dream of long-term upside. And, no, I am not naive enough to believe that all investments pan out in the 'long run'. That's not my point," says Mr. Harrold.
"My point is that too many solid companies -- American 'household names' -- are being removed from the public marketplace at depressed prices. It's not an indication of good things to come, in my opinion. The U.S. markets must not be devoid of quality companies like Servicemaster at the benefit of 'Private Equity'," says the DonHarrold.net commentator.
"One fear I have is that companies such as Intel (Nasdaq:INTC) could end up in the coffers of 'Private Equity'. Hey, sound far-fetched? Why? Market cap too high at $110 billion? That's peanuts to some of the 'Private Equity' firms out there now. Now, I don't believe we'll see Intel in the hands of 'Private Equity' any time soon, but just the fact that their market cap will not be the deciding factor at this point should cause folks to look around and wonder, 'who's next?'," adds Mr. Harrold.
"Don't laugh at this one, either, but why not Ford Motor (NYSE:F)? There's another great American staple whose stock price is down dramatically, news is not positive for the short term, and well, why not? Daimler's on the block -- supposedly -- so why not Ford?" asks Mr. Harrold.
"The bottom line for investors these days is that you must now compete with market-makers, specialists, other investors, 'acts of God', and now, faceless 'Private Equity'. The stock you invested your money in for the 'long term' may be the next buyout. Don't be surprised if you turn on CNBC next week to see that your portfolio's been bought for pennies on what your investing dollars were supposed to return," says Mr. Harrold.
"About the only company I can think of that can't be bought by 'Private Equity' is Microsoft (Nasdaq:MSFT). But, hey, who knows? Maybe Bill Gates' friend, Warren Buffett will put a deal together next time Bill's in Omaha," quips Mr. Harrold.
"Now, THAT would make for quite the 'merger Monday'!" concludes Mr. Harrold.
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