By now, most of you have heard that SBC - oops AT&T - is planning to acquire BellSouth and reconsolidate much of the old Ma Bell that hasn’t already been remarried. This story is certain to consume much of the financial media tomorrow and before the discussions begin, I am already tired of it. So rather than contributing to the debate over the merits of this transaction, I’d rather talk about what I plan to do with the stocks in question and more importantly, what my typical reaction is to mergers and acquisitions.

Given that I saw no indication in last week’s charts, there will not be any signal changes in BLS or T when I update the database this week. Currently, I have Up signals for both T and BLS. For that matter, of the 24 stocks covered by Hedgefolios in the Diversified Telecom Services industry, I have Up signals on 22 of them (to see this just go to PROFILE and type T or BLS in the symbol box).

Hopefully, the resulting market action will keep Hedgefolios signals in the right direction, but I am always humbled by M&A stocks. BLS and T are now in the hands of the arbs and this is a group that is worthy of respect, if not fear. Certainly, I don’t advocate trying to compete with them. They possess capital resources and trading strategies that outpace almost every other investor. So, if you are lucky enough to be long the right stock - good for you. For those of you on the opposite side of the arbs, I am sorry. If you are not in either of these stocks and are tempted to speculate by taking a new position, I will never understand the attraction, and in addition to not making buy or sell recommendations, I don’t advocate speculation.

Under similar circumstances, I usually look for the soonest possible exit that the market will allow, say “ring me up” and try to get out of the way. There are, after all, thousands of stocks in the Hedgefolios universe to consider where you don’t have to deal with the arbs, regulatory approval or competitive bids. Given the political history of telecommunications, I can only imagine that these stocks will be facing a regulatory process that may last many months, if not a year. I really don’t like analyzing the probabilities of regulatory approval, but if you do, I am certain you will have a long time to study it via the arb gap. Lastly, in this transaction, I don’t see BLS getting bid up by a competitor to AT&T so unless I am wrong, this deal will be pretty boring to watch. I’ll keep working on their signals, but for the most part, I have already moved on.