Much of the time we are involved trying to connect or make sense of the world we live in. An example of the connecting the dots was made in a movie called Working Girl. The movie was made in 1988 directed by Mike Nichols and starred Harrison Ford and Melanie Griffith. It is an enjoyable movie to watch.

In the movie the Melanie Griffith character worked in a large brokerage firm and wanted to be involved with mergers and acquisitions. She was a secretary to a lady who was in the field and she had an idea. The idea was for a large conglomerate who wanted to fend off a possible takeover by buying a company which the other company had a conflict of interest with. In this case it was for the company which owned radio stations because the takeover company could not hold radio companies because of government regulations.

Much later in the movie, the head of the large conglomerate asked the Melanie Griffith character how did you get your idea? The answer was reading Forbes, she saw the article that you wanted to expand in broadcasting. Reading an article in the New York Post about a radio station announcer who was hosting a fundraiser with the daughter of the large company, the idea came to buy radio instead of TV. Eventually, the Harrison Ford character who knew about Mergers and Acquisitions ran the numbers and came up with a target company and they made a pitch to the large conglomerate and they said yes. Later on in the movie, while they were coming up with a number, she saw the radio announcer was thinking of leaving, and they made their price based on him staying.

The movie is fiction but in the world of mergers and acquisitions, people read about what companies say their future plans are and then offer alternatives. Recently read a book about someone who read the financial press about a conglomerate wanted to shed its holdings to focus on one industry. The person set up a meeting with the CFO and it took a considerable amount of work to determine the best way to sell the divisions, to whom the divisions could be sold to paying as little taxes as possible and rewarding shareholders, but the impetus was the article in the financial press. The article led to large fees for the firm and a healthy bonus for him.

One of the reasons why it is good to focus on owning less than 20 stocks is because you can focus on their industries and what the press releases are in the financial press. As you read them, you use your background and information to try to connect the dots to whether you want to continue to hold or look for alternatives. Reading the financial press is a good thing to do as well as trade journals and regular newspapers and magazines.

There are more questions than answers, till the next time – to raising questions.