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Strategies & Market Trends
Speculating in Takeover Targets
An SI Board Since December 2001
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4998 97 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!


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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ReplyMessage PreviewFromRecsPosted
4998 BLMN-Speculation Someones pain is BLMN's gain? A 3 a.m. bankruptrichardred-yesterday
4997Diamondback buys Energen for $8.4B in big Permian consolidation chron.comrichardred-yesterday
4996Sold some SFS > 7 on the quick run up. Bought some JVA < 5 with proceedsrichardred-Tuesday
4995Back into the oil patch with some call leaps JAG & WRD. richardred-Tuesday
4994Added ASYS today & JVA Two biggest trades IN ASYS so far, up ticks. 33,00 &richardred-Monday
4993Added CTG today- On SITT list for 2017 & 2018. I like the fact RHI & Hrichardred-Monday
4992Activist Elliott Management to Push Nielsen Holdings to Sell. wsj.comrichardred-Monday
4991The overhead NG heaters are very nice. We put those in our bodyshop in Texas. Irobert b furman-Sunday
4990I'm Planing some over head NG heaters. I don't have the concrete floor prichardred-Sunday
4989Hi Rick, Nice shop. 30 x40 is the same dimension of mu one room school house brobert b furman-last Saturday
4988OT- Bob hows the AG building market doing? Our Greenhouse came down and a 30 richardred-last Saturday
4987 Hi Bob- A very good spot on thought. I also believe W. Buffett dumped DE for richardred-last Saturday
4986Hi Rick, A quick story or two about Deere. My lifelong best friend has a finisrobert b furman-last Saturday
4985Went dumpster diving again Friday. A small bet on DBD. [tweet] P.S Afterrichardred-last Saturday
4984RE-ASV speculation Big earnings miss. it was ST painful, but not totally unexperichardred-last Saturday
4983Added ASYS in Quantity today. IMO bad news is back loaded into to the up and corichardred-last Friday
4982RE-BLMN speculation Roark Capital Group bought out Buffalo Wild wings for overrichardred-last Friday
4981US: Campbell Soup Faces Sale Pressure From Daniel Loeb 10th August 2018 Crichardred-last Friday
4980Two buys today- Added back #1 2018 TT pick ASTE common to go with my calls. Wenrichardred-August 7
4979Hi Rick. For the last 5 years I have made homemade sauerkraut. Last year I madrobert b furman1August 6
4978A Bullseye today. My first of the year. A stock deal for BMS- BEMIS. A few thorichardred-August 6
4977RE-Sauerkraut - Seneca Foods competitor is leaving NY . Sauerkraut leaves Shorrichardred-August 5
4976Amcor offers shares for Bemis, all eyes on synergies [graphic] richardred2August 5
4975 UPDATE 1-Australia's Amcor shares on trading halt pending acquisition updatrichardred-August 5
4974 $SFS- Speculation- This company has been through the ringer in it's pastrichardred-August 5
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