I shouldn’t have been surprised when I read the news yesterday that Toys R Us was selling FAO Schwarz. Toys R Us bought FAO in 2009 as part of a strategy to take market share during the economic downturn and to raise its profile.

Founded in 1862, FAO Schwarz was the oldest toy store in the United States when its last remaining flagship store, on Manhattan’s Fifth Avenue, (now an Apple store) closed in 2015. Tourists and locals, children and adults alike, marveled at the serpentine suspended train tracks and giant-sized keyboard made famous by Tom Hanks in the movie Big.

It never made much sense to me at the time of the purchase how Toys R Us, with its institutional lighting, dull vinyl floors and seas of unmanned registers could make FAO Schwarz better. It seemed equally unlikely that Toys R Us, laden with debt from its leveraged buyout and desperate to find ways to cut costs, would adopt some of FAO’s high-end selling strategies.

Wall Street is littered with mergers gone bad. Gigantic mergers tend to be the most risky. Eddie Lambert’s merger of Sears with K-Mart, described as the collision of two garbage trucks, stands out as one of the worst.

Simply marrying two large companies doesn’t guarantee more profits. Management often promises “efficiencies,” a diplomatic term for eliminating jobs when they merge operations such as human resource, IT and marketing departments. Often these cost cuts initially but fail to lower expenses in the long term.

But sometimes mergers mean magic.

I have several stocks in the Profit Catalyst Alert and Growth Stock Strategist portfolios I chose because of mergers. The mergers I like best include a new product line that can give the company a new leg of growth. Other mergers bring a new technology into the company’s fold to expand its product lines to a new industry or new customers.

Expedia’s 2015 purchase of Orbitz was a fabulous idea. It gave the company exposure to airline ticketing, a market growing significantly faster and with higher profits than hotel booking. Online hotel booking, which had become an increasingly competitive and crowded market, was a big part of Expedia’s business. The airline ticketing business had much larger barriers to entry. Not only did Expedia grow by adding a new product line, the airline business helped protect its hotel business as it bundled deals for rooms and airfares.

When Mergers Go Bad

I’ve been keeping my eyes peeled for some bearish trades based on large mergers. There have been several large deals whose “efficiencies” seem to be petering out.

These deals typically look good for the first few quarters. Investors expect gargantuan “one-time” write offs of costs from the merger, and give management a grace period to get its new strategy in place. But when the grace period is up and the dust clears these the mergers turn out to have been collisions, and investors can making a lot of money buying puts—which I will recommend—to capitalize. The timing of these bearish trades is critical so I’ll be crunching some serious numbers in the next few weeks.

In the meantime, it doesn’t look like I’ll be revisiting my youth with a trip to an FAO Schwarz store any time soon.

Sadly the ThreeSixty Group, the buyer of FAO Schwarz, has no plans to open FAO stores. As a designer and distributor of consumer goods, it will create FAO Schwarz branded toys to be sold with a “unique in-store experience” via retailers in the fall of 2017.