Why Zoltek's Shares Jumped Today

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 carbon-fiber maker Zoltek jumped as much as 16% mid-day after rumors of a buyout emerged.

So what: The Nikkei newspaper is reporting that Japanese competitor Toray Industries will pay at least $610 million for the company. Executives from the company didn't respond to requests for a response from Bloomberg, which isn't surprising, even if the reports are true.

Now what: If the $610 million price is correct, it isn't much of a premium, and is actually lower than shares bounced to today. Buying a stock on buyout speculation is tough because you never know what's true. Today, I don't think there's any reason to buy into these reports; but if you're looking to cash out, it may be worth taking some chips off the table in case the reports aren't true, and the stock drops back to its old price in the next few days.

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The article Why Zoltek's Shares Jumped Today originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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