EZchip Semiconductor Ltd (EZCH) and Advance Auto Parts, Inc. (AAP) are red hot today
Monday was an
active day on the corporate transactions front, but things have gotten interesting this morning, too. Specifically,
EZchip Semiconductor Ltd (NASDAQ:EZCH) announced it has agreed to a buyout agreement with
Mellanox Technologies, Ltd. (NASDAQ:MLNX), while Starboard Value LP disclosed a 3.7% stake in
Advance Auto Parts, Inc. (NYSE:AAP). Below, we'll take a closer look at the headlines, as well as their impact on charts.
Trading on EZCH was halted pre-market on
reports of a buyout. The Israel-based firm has since confirmed it is being acquired in a deal worth $811 million, or $25.50 per share. At last check, the stock has soared 14.5% to $25.18, after earlier touching an annual high of $25.21. Benchmark responded to the news by cutting its rating to "hold" from "buy," but upping its price target to $25.50 from $25.
Meanwhile, MLNX was last seen off 5.6% at $37.58, taking its year-to-date deficit beyond 12%. This ought to cheer short sellers and option bears alike. Nearly 7% of the stock's float is sold short, and its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX)
put/call volume ratio of 2.70 ranks near the top quartile of its annual range. If that's not enough, Mellanox Technologies, Ltd.'s Schaeffer's put/call open interest ratio (SOIR) of 1.20 rests just 4 percentage points from an annual peak.
Separately, AAP is fresh off an all-time high of $192.50 on Starboard's newly announced stake, as well as the investment firm's
bullish remarks. Specifically, a letter to AAP's CEO said the stock could be worth more than $400 per share by "implementing a comprehensive margin improvement program." At last check, the equity has spiked 11.7% to trade at $190.52 -- up nearly 20% year-to-date.
Short sellers could be feeling the heat. While
short interest on Advance Auto Parts, Inc. dropped almost 16% over the last two reporting periods, it still represents 5.6% of the stock's float. At typical daily trading levels, it would take over one week to buy back all these bearish bets.