Strategies & Market Trends
Speculating in Takeover Targets
An SI Board Since December 2001
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4862 95 0 CPB
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!



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
TOP TEN TAKEOUT SITT LIST FOR 2018 & brief thoughts- several repeats

The market is done trading for 2017.

1. ASTE- Infrastructure - Forget Congressional debate for now,remember the hurricanes. IMO Deere & Cat among many shoppers.

2. CTG- Message 31367340

3. MNTX- Message 31104927

4. ASV- Hypothetical Hunters- CAT-Kubota

5. BGS- A food biggie looking for medium scale- merger of = with Pinnacle Foods for scale?

6. ANIK-
IMO a gem CINGAL® waiting for FDA US approval.

7. SABR- IMO a private equity target-

8. LYBC- Micro cap regional bank-became a holding company-IMO perfect fit for CNND

9. MCF- Southern Delaware Basin at a discount with oil > 55. Needs a neighbor buyout to drill it's property.

10. MITK- Wild pick-needs a parent with deep pockets to scale and grow at a faster pace. IMO a platform for Paypal-PYPL

P.S. I currently own all 2018 selections through common stock or call options. My Stock Sales Subject to change without notice. If Anyone is buying anything based from this list. Do your DD or you might be pee peeing & poo pooing.
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4862RE-CPB interim CEO say's Campbell's is not up for sale. Sure, I'verichardred-5 hours ago
4861Lyons National Bank Speculation- Regional Bank acquisitions have been having a srichardred-6 hours ago
4860MITK-Speculation Paypal makes a big move today. Is Square ready for one? Parichardred-last Friday
4859Added to CPB on the drop this morning. IMO Eventually the interim CEO will be rrichardred-last Friday
4858Added to IEC & FEIM today. For some strange reason thinking of former notabrichardred-last Wednesday
4857Sold ASYS today.richardred-last Monday
4856LWAY speculation CFO resigned - IMO press release is BS- > Mr. Waldron&richardred-last Monday
4855 I know your on to something here. This is the kind of company that fits into myrichardred-May 12
4854Bought shares in AIRI today with speculation that within three years the companygizwick2May 11
4853 VSH-Speculation Could Texas Instruments be ready for a big acquisition? It&#richardred-May 11
4852ENZ-Speculation Is Bio-Rad ready for another acquisition? Bio-Rad to Acquirerichardred-May 11
4851Sold out of TG position.richardred-May 11
4850Hi Rick, Tootsie Rolls ,in my world are definitely a sin stock. I used to buy robert b furman-May 11
4849Interesting you brought up Privately held Mars. IMO TR would make a nice fit forrichardred-May 11
4848Hi rick, Don't know anything about candy. If you ever get to Vegas and visrobert b furman-May 10
4847Hello Bob, making candy isn't rocket science, or is it? You must remember thrichardred-May 10
4846You think there is a battery in the middle that will tickle your tongue when yourobert b furman-May 10
4845New buy today TR - TOOTSIE ROLL INDS In the food sector or should I say the sugrichardred-May 10
4844 Sold out MDWD - PBH & CECE - proceeds Added to IEC and MLR today. Liked thrichardred-May 10
4843Added to MCF today on the downgrade. I think with oil prices where they are now.richardred-May 8
4842It's been awhile since I've bought something. An Add today to a core holrichardred-May 8
4841Nestles/Starbucks Coffee deal formally announced. What will Cott do? >2018 richardred-May 7
4840RE-SABR speculation Good earnings and good forward guidance IMO. However the 1richardred-May 5
4839JVA- Speculation Nestles making a move on Coffee. JVA makes a small niche acrichardred1May 5
4838OT- project almost complete [graphic][graphic][graphic]richardred-May 5
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