Level 3 Communications' Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of long-distance network operator Level 3 Communications (NAS: LVLT) jumped to at least level 4 today, gaining as much as 21.7% before falling back to a still-impressive 9% boost -- all on heavy trading volumes.

So what:Level 3 already jumped once this week, as the company closed its stock-swap acquisition of Global Crossing and announced a $1.35 billion program to buy back most of Global Crossing's debt. Today, the rally continues as analyst firm FBR Capital Markets says that Level 3 really should outbid Windstream's (NYS: WIN) existing $820 million offer to buy broadband service provider PAETEC (NAS: PAET) .

Now what: So this is speculation, and investors clearly agree with PBR's theory that Level 3 and PAETEC belong together. I'm not so sure. The Global Crossing buyout still doesn't make sense to me because it simply made Level 3 bigger and not more efficient -- PAETEC would be more of the same. But hey, Level 3 shares have presented an 11% market return since the Global Crossing deal was announced, versus a 15% drop in the DJIA (INDEX: ^DJI). Let's just see if that goodwill stays around when the company starts to report combined results in a quarter or two. I remain a skeptic.

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At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio, follow him on Twitter or Google , or peruse our Foolish disclosure policy.

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