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Strategies & Market Trends
Speculating in Takeover Targets
An SI Board Since December 2001
Posts SubjectMarks Bans Symbol
4792 94 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
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
youtube.com

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

6. ANIK- siliconinvestor.com
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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4792RE-SENEA , ASIX P.S. I liked the earnings at ASIX. I think the earnings forwrichardred-4 hours ago
4791Sold some CTG (Still a Top 5 holding) bought some SENEA , ASIX & TT SITT holrichardred-5 hours ago
4790GIS goes for Dog food [tweet]richardred16 hours ago
4789FWIW-Made a small bet with some OOTM call options on BLMN. richardred-yesterday
4788Doubled position in ENZ today.richardred-yesterday
4787Bought TG today & doubled down on TG position on the bad earnings. Hopefullrichardred-yesterday
4786I like Carrabas, We used to to the one in the Woodlands Mall often. Has a grearobert b furman-yesterday
4785I can see it Bob. Tilman just spent a boatload on the Houston Rockets. With allrichardred-yesterday
4784Hi Rick, Flemings is very upscale vs Outback. I think McCormick and Schmick worobert b furman-yesterday
4783Looks like some activism going on in Bloomin Brands. I sold out a little while richardred-yesterday
4782Added to ACET speculation. Sticking to my theory the New CFO is a Pharma guy. Trichardred-Wednesday
4781Sold ASTE Leap call options today for big % gain. Still own common shares-core richardred-Wednesday
4780Bought some CPB leap call options today.richardred-Wednesday
4779New small buy today OMI. It's beaten up, but IMO an area for consolidation.richardred-Wednesday
4778One of my past big winners CECE IMO has dropped to a compelling level. I re-entrichardred-Wednesday
4777Added to VSH today. # 4 On last years TT SITT pick.richardred-Wednesday
4776Added to LWAY speculation near 7.00. richardred-Tuesday
4775Sold some CTG today- Still a core holding - Put some proceeds into MLR & Trichardred-Tuesday
4774Not to mention a good Wisconsin "OLD FASHIONED" is traditionally topperobert b furman1Tuesday
4773RE-8K SENEA snip> Reasons for exiting the business include; large operatinrichardred-Tuesday
4772NXP is BIG !! A serial acquisitor in its own right. Wonder if anti-trust will brobert b furman-Tuesday
4771NXPI. I'll exit at this morning's price. A couple of bucks under the Paul Senior-Tuesday
4770You received a increased 127.50 NXPI bid today. Chances are this might be it IMrichardred-Tuesday
4769Added to CPB today sub- 46 & beaten up ASYS Depressed outlook for ASYS morichardred-last Friday
4768New buy today PBH / Prestige brands . Message 31486995 P.S. Idea RE- P.S.richardred-last Friday
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