Splunk to Be Acquired. When to Sell, What to Buy?

Looking for a quick and easy way to reduce volatility? Stop looking at your portfolio so much. In the world of tech stocks, this advice can go a long way towards helping you sleep well at night. Remember, it’s never over until the large-and-in-charge woman sings. For long-term investors with time horizons measured in decades, the “when to sell” decision is often resolved when an M&A event happens. That’s precisely what’s happening with one of the stocks we’re holding on – Splunk (SPLK).

Cisco and Splunk

Details matter, so always go to the horse’s mouth.

The above press release by Cisco (CSCO) talks about their plans to pay $157 a share for Splunk (a $28 billion purchase price), the company’s largest acquisition to date, and a deal that’s expected to “accelerate Cisco’s business transformation to more recurring revenue.” So, why do shares of Splunk currently trade in the $146 dollar range? That 7% discount reflects the market’s uncertainty that the deal will close “by the end of the third quarter of calendar year 2024, subject to regulatory approval and other customary closing conditions including approval by Splunk shareholders.” That seems quite likely, and here’s why.

Our previous research talked about how private