The case of Office Depot and Staples is a good example of why investors should be aware of both the bull and bear thesis on a stock. For those who were short Staples at the time, being aware of the bull thesis would have helped frame the risk of a short position in Staples. Since November, that bull thesis has largely played out as both companies are now several steps closer to a potential merger. Office Depot and Staples are now up 78% and 45%, respectively, as the stocks price in the increased likelihood of a combined company.
Read MoreStaples: Bull Case Gets Stronger with Starboard Stake
The bull case for Staples is not well understood by casual investors. However, as I wrote on 11-20, there is a bull case here, and its ultimate home-run scenario is based on a merger between Staples and Office Depot. Today, the bull case took another step towards the home-run scenario as Starboard disclosed a stake in Staples and increased their existing stake in ODP. The stocks for both ODP and SPLS were up significantly on the news. I'll explain why this is an important development for the stocks.
Read MoreStaples: The Misunderstood Story of Staples
Investors often miss the bull case for Staples. I'll detail that bull case here.
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