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Strategies & Market Trends
Speculating in Takeover Targets
An SI Board Since December 2001
Posts SubjectMarks Bans Symbol
5378 101 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

P.S. I currently own all 2019 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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ReplyMessage PreviewFromRecsPosted
5378Clabber Girl in Terre Haute will be laying off 25 employees starting Aug. 31, thE_K_S-yesterday
5377LYCB- Speculation-Small bank merger Message #4762 from richardred at 2/15/2018 richardred-yesterday
5376Seemed like a nice premium. Circor Stock Falls After Company Rejects Crane'richardred-yesterday
5375Entegris scoops up MPD Chemicals for $165M Jul. 15, 2019 9:38 AM ET|About: EnteE_K_S1yesterday
5374BRIEF-Symantec, Broadcom Cease Deal Negotiations - CNBC BY Reuters — 9:10 Arichardred-yesterday
5373I sold out at a much higher price than the current stock deal price. In a move trichardred-yesterday
5372You like gardening, right Bob :+ ) Start of a trend? After death: Washington richardred-last Saturday
5371That business is in decline when you look at cremation vs traditional coffin burrobert b furman-last Saturday
5370>Wonder if Batesville Division will eventually be sold. Sure doesn't seemrichardred-last Friday
5369Hillenbrand is a global diversified industrial company with multiple market-leadE_K_S1last Friday
5368Hillenbrand to Acquire Milacron Holdings Corp. Jul 12, 2019 Hillenbrand, Inc.richardred-last Friday
5367AWRE-Speculation- Interesting developments IMO, but miles to go for AWRE ? Air richardred-last Friday
5366For this deal, It's currently at a 8% deal discount (or premium to buying noRobert O-last Tuesday
5365Cisco's Acacia takeover sends optical stocks surging Cisco to buy supplier E_K_S-last Tuesday
5364Brks has the cash to just buy all the shares - if they have growth and the produrobert b furman-July 8
5363The thing about this company they initiated a growth strategy when I originally richardred-July 8
5362Hi Bob: Hypothetically, many divisions that could fit if the company is hypothetrichardred-July 8
5361My experience w/ new CEO's usually 18-24 month leash depending on what they E_K_S-July 8
5360HI richard, Sounds like a great buyout for Brooks to take on with their life scrobert b furman-July 8
5359Nice size add to HBIO today @ 1.75. IMO-Looks like some institutional investorsrichardred-July 8
5358Agreed - 8K- The golden parachute is now in place. Mr. Green entered into an richardred-July 8
5357CEO change is typically the first step if Board wants to package the company forE_K_S1July 8
5356HBIO- Speculation - WoW- Change already James Green Named President and CEO of richardred-July 8
5355Another add to HBIO at or near the 52 week low this year. Basically a 20 + yearrichardred-July 5
5354Added to HBIO today sub 2 again.richardred-July 5
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