Peet’s Coffee & Tea offered $26 per share for Diedrich Coffee this morning. This is a perfect example of why I am such a fan of technical analysis. DDRX was a penny stock back in March. All of the sudden, it became the best company in the world and went from under a $1 to $30 in 6-7 months.
I mentioned this one on October 17th as a trading idea because while I had no clue of why this stock was going nuts, it was obvious that big volume was coming into this little company and that it was breaking out over key technical levels. Perhaps PEET bought it because the fundamentals are compelling and the market saw that. Maybe that is the reason the volume was coming into the stock. Certainly plausible.
The skeptic in me thinks that many have had knowledge of this acquisition for a while. It is interesting that the stock was recently trading higher than the offer price meaning that no real premium was given for the company. That is pretty unusual unless the offer price was already known.
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