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Pros: Seagate A 'Buy' On Takeout Chatter, But Not Yet

According to CNBC’s Mary Thompson, Seagate has said it has received preliminary interest from a party that wants to take the company private.

The board is evaluating the interest as well as other strategic options, she adds.

Keep in mind, back in September there were reports that the company was in talks with TPG and Silver Lakes about going private but those talks failed.

Seagate has retained Morgan Stanley and Perella Weinberg as advisers.

How should you position?

Unlike some of the other rumors we've seen in the space, the thing that makes this one credible is that Steve Luczo is the CEO who took them private back in 2000 and he became CEO again at the beginning of last year, explains Dan Niles of Alpha One.

Luczo has shown he's willing to pull the trigger on something like that if he doesn't think the company is fairly valued. This is definitely something to be taken seriously.

However, there's an extra variable here.

Wall Street is expecting the numbers to not be good at Seagate and for the company to guide down, Niles adds. My cardinal rule is not to buy in front of an estimate cut. So I would not not buy Seagate ahead of that.

If there is an estimate cut or pre-announcement then I’d look to get in. If it sells off, I'd take advantage. This is one of the few buyout speculations that I would have faith could go through, Niles concludes.


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Trader disclosure: On Oct.14, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (GE), (GOOG), (INTC), (MON), (MSFT), (MOS), (POT); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Terranova Owns (GLD), (APA), (AAPL), (IBM), (EOG), (HES), (OIH), (OXY), (ORCL), (SU), (VRTS), (XBI), ( C), (JOYG), (RIG), (UPL), (PEP), (FCX), (PFE), (HOC), (NOV), (CRM), (MMM), (MCD), (NKE), (CREE), (ISRG), (XLF), (SDS); Terranova is short (APOL); Finerman and Finerman’s Firm own (JPM); Finerman and Finerman’s Firm own (BAC); Finerman’s Firm own (MSFT); Finerman’s Firm owns (RIG); Finerman’s Firm owns (WMT); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts

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