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Strategies & Market Trends
Speculating in Takeover Targets
An SI Board Since December 2001
Posts SubjectMarks Bans Symbol
6084 103 0 CTG
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.

SITT 2019-With Brief Hypothetical Takeover Reason & Fit

1. CTG- Computer Task Group Inc-Staffing M&A volume increased 28% YOY in 2017-Private Equity/ASGN?
2. VPG- Vishay Precision Group- Cree- Wolfspeed fit
3. ASYS- Amtech Systems Inc- Solar & Semi. eqp.-Oxford Instruments-KLA-Tencor?
4. MEI- Methode Electronics Inc-Supplying cars of the future.Magna Int-Fit
5. BLMN- Bloomin Brands Inc-Outback Steakhouse-Tillman's Empire build? -Private Equity
6. LWAY- Lifeway Foods- Smolyansky family cashes out ?Chobani ? With Danone ROFR
7. TAYD- Taylor Devices Inc- Mr.Taylor retires-Mageba Fit.
8. IEC- IEC Electronics- Made in USA -Electronic MFG. Services-Private Equity
9. VSH- Vishay Intertechnology Inc-Leader Mosfets-Acquisition lull-A Texas Instruments Fit?
10. ASV- ASV Holdings Inc- Infrastructure pure play-shovel ready-Kobota/CAT fit

SITT 2020 -With Brief Hypothetical Takeover Reason & Fit

1. ENZ- Message 32365206
2. VPG- Message 32248721
3. CTG- Message 32340354
4. CYAN- Message 32447640
5. LYBC- Message 31483408
6. MDWD- Message 32452892
7. MNTX- Message 32468214
8. VCEL- Message 32452892
9. MOD- IMO fits for a Private Equity portfolio.
10. ARTW- Message 31087878 Ward Jr. Takes it private?(Low premium)


P.S.
I currently own all 2020 selections through common stock. 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. Many low priced non-investment grade.

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6084 Sanofi To Acquire Kadmon To Further Strengthen Growth of Transplant Business richardred-September 8
6083Perrigo to Acquire Leading Consumer Self-Care Company, HRA Pharma - Transactionrichardred-September 8
6082Bought back into JVA yesterday sub 6 again.richardred-September 8
6081Hill-Rom Shares Rise as Baxter Seals Takeover Deal >HRC BAX BY Dow Jones richardred-September 2
6080Trillium Therapeutics TRIL | Up 191.13% Shares of Trillium Therapeutics ( TRIrichardred1August 23
6079RE:ENZ speculation New 13G filing today and IMO an interesting development in trichardred-August 20
6078>Both examples of... "If only I had held." Yes, I've had a corichardred-August 13
6077Both examples of... "If only I had held." Same same for when I persiCautious_Optimist-August 13
6076Added to HLX & MNTX below 7richardred-August 13
6075Brazil's JBS Proposes to Buy Rest of Pilgrim's Pride -- Update BY Dorichardred-August 13
6074Sold POSH on the 7% dead cat bounce,richardred-August 12
6073HLX- Bought back in the shares I sold.richardred-August 12
60722019 SITT pick and backyard company for me. IEC- IEC Electronics goes down todarichardred-August 12
6071Sold AFI shares bought below 4.00.richardred-August 11
6070Bought some POSH-POSHMARK today as it takes a 13% hit today. IMO-Seems overly purichardred-August 11
6069New Buy- Bought into ENDP-ENDO on the nearly 10% decline today.richardred-August 11
6068Bought back into a little MNTX today. IMO Earnings were not to bad .It came downrichardred-August 9
6067John Deere Acquires Bear Flag Robotics to Accelerate Autonomous TechnologyDeere richardred1August 9
6066SAFM gets a Cargill 4.5 billion buyout bid today.richardred1August 9
6065Added a little AFI today @ 3.94 P.S. Hey you never know! The Armstrong name irichardred-August 6
6064HLX-sold shares bought @ 3.92 todayrichardred-August 6
6063Added more in quantity to AFI < 4.96richardred-August 5
6062RE: GNE- possible spin off-> Genie believes that shareholders could benefit frichardred-August 5
6061Nice size add to HLX today. Small add to AFIrichardred-August 4
6060New Buy- AFI-ARMSTRONG FLOORING- Big disappointment in the latest earnings. Barichardred-August 2
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