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Strategies & Market Trends
Speculating in Takeover Targets
An SI Board Since December 2001
Posts SubjectMarks Bans Symbol
4636 93 0 MNTX
Emcee:  richardred Type:  Unmoderated
One area investors might consider in balancing a portfolio with risk options, is one of my personal favorites, takeover targets. For new and old investors who are unaware of what's involved. I will try and go over some areas you can go over, to see if this might be a viable option for you.

First off, I would like to discuss why. Why, is very simple. It can be a quick way to make a good return in a short time frame when successful. I would like to stress the word successful. From my own personal experience most takeover picks need time factored in to be realized. Why, if someone was to ask me? Why, is because of many reasons. Why is the company a target in the first place? If you can answer that question, IMO your on the right path.

Next is your reasoning in your pick. 1. Are their rumors on the street, or has a bid been made. Chances are if the street knows about it , it's to late for you, without high risk. This area is usually handled by risk arbitrage players. They have capital to invest in this risky area. Many times after a bid is made, they jump in. Speculating to make a profit on a higher bid, or price difference till the close of the deal. A quick return for high risk, the payoff.

This is good for them, but what about you? Don't worry about them. You can try and achieve the same on a much safer degree of risk. There is a price to pay for safer. I will try and go over some strategy, and some of the things I look for. Earlier, I mentioned a time factor is needed for results to realized. This is not a bad thing,since you are picking before there are rumors on the street. This makes time on your side. With time involved, chances are the stock price will improve just on fundamentals alone, (Sales growth, earnings growth. Many times this will be at a higher stock price than a quick take out price.

The first words you hear mentioned by (especially newer investors is)(I've been guilty to). The low price of this stock makes this a takeover. How many times has this happened when we thought we made a good pick, but something didn't go as we planned. This shouldn't IMO-be the reasoning.


Your Reasoning-Your reasoning in making your choices should be determined by the amount of capital you have available for risk,and the time you can leave it available for risk. Having said what I've said, lets go over targeting areas if you have made a decision this is a viable investing option for you.

The choices-(homework time)-Say to yourself, if you were a big company with money available what would you buy? The last statement already has a clue (money available). This leads to more questions. Many big companies have capital available to acquire other companies. Many have sold divisions that didn't fit in its current business plans. They want to add to existing businesses-(another clue). If your the acquiring company, are you trying to gain market share, or are you trying to improve margins by eliminating a competitor? Another question-How much is it going to cost me? Is the company I want to buy selling below book value relative to it's current market valuation? Am I going to be taking on goodwill, or are my earnings going to be added to? There are still many many more questions you as an acquirer can ask yourself. The better you are at putting yourself in their place the better off you will be in your picks.

I have only touched on some areas of homework. The more time you put in, the better off you will be. Sometimes you nail one you didn't even expect, and sometimes that one you expected, never gets realized (that's part of investing).

I will leave this thread open for discussion for areas I haven't touched on, questions that have arisen, or new SITT picks for review by others. My picks, are subject to change without notice. I want to include my favorite caveat. "LISTEN TO WHAT EVERYBODY HAS TO SAY, BUT DO WHAT YOU THINK IS RIGHT YOURSELF". I always like discussing picks of others and your strategy.

Good Investing to All!


Richardred




TOP TEN TAKEOUT SITT LIST FOR 2017

New rankings and Several Repeats.

  1. INCR
  2. CTG
  3. TDC
  4. VSH
  5. IXYS
  6. MNTX
  7. HBIO
  8. ANIK
  9. SYKE
  10. JVA
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ReplyMessage PreviewFromRecsPosted
4636New HSBC chairman Mark Tucker eyes American takeovers Aimee Donnellan Novemberrichardred-last Sunday
4635RE-SNAK Taking my lumps. Sold out of my take under for redeployment elsewhere.richardred-November 9
4634Yes, a black eye but doesn't look devastating for MNTX. It also sets up a rThe Ox-November 7
4633MNTX -8K The dreaded accounting issues. I didn't see this one coming! richardred-November 6
4632Re-entered DLTH today. For some strange reason thinking of the Zappos acquisrichardred-November 6
4631Sorry, I've never owned an ETF fund. So I can't give good personal knowrichardred-November 6
4630 There has to be a lot of Qualcomm stock held in ETF's. On matters like thiwaitwatchwander-November 6
4629These are the people below Broadcom must convince. I heard an analyst say this drichardred-November 6
4628Broadcom makes unsolicited $130B bid for Qualcomm in largest tech deal in historrichardred-November 6
4627Wow, that's one spicy meatball.richardred-November 3
4626Shares of Qualcomm Inc. Robert O-November 3
4625IMO another good indirect economic sign- Someone has to be loading those Amazon richardred-November 3
4624RE-OMI-The market likes today's acquisition news. Corporate News Blog - Owerichardred-November 3
4623Took profits-Sold out of ATROrichardred-November 3
4622Sold ACET bought this morning average cost 8.40. @ 10.33. richardred1November 3
4621Sold out of HBIO.richardred-November 3
4620Having a good year so far with the portfolio. The update came out today. I'mrichardred1November 3
4619Great trade and even better timing, IMO! Very well done. Too much on my plate The Ox-November 3
4618FWIW- I was ready early this morning and picked some up at 8.28. Earnings werenrichardred-November 3
4617I could be wrong. However I'm figuring even if the company can earn a buck nrichardred1November 2
4616It could be that some are expecting a "kitchen sink" type of quarter wThe Ox-November 2
4615The stock is moving down more today in anticipation of bad earnings . The biggerichardred-November 2
4614IMO- OMI -Owens & Minor a good value fit. A good buy for scaling up medicalrichardred-November 2
4613Sold out last Batch of SHLM call options for giant % gain. richardred-November 2
4612Potential acquisition candidates for Amazon in the prescription drug space: MesGlenn Petersen-November 2
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