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Strategies & Market Trends
Speculating in Takeover Targets
An SI Board Since December 2001
Posts SubjectMarks Bans Symbol
5705 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
5705Picked up some more CYAN. Reasoning-The supplement market seems gaga over CBD. richardred-5 hours ago
5704Added to CYAN -CYANOTECH CORP today.richardred-7 hours ago
5703Hi rick, I got a 30 % off via the web order. Got an ad that 25 - 50 percent ofrobert b furman-8 hours ago
5702Hi Bob: What a difference a day makes. An analyst cutting their target to ninerichardred-8 hours ago
5701I will be curious to see the NG draw number on the next report. Last report wasrichardred-8 hours ago
5700HI Rick, Nice trading! Those good earnings came from my purchase of a very nicrobert b furman-8 hours ago
5699For the Oil/NG swing plays . .Will look at swing trade position on 60 min chart E_K_S-8 hours ago
5698RE-CRZO worked out as a swing trade. Made a quick 1K.richardred-9 hours ago
5697Took advantage of DLTH good earnings news. Assuming a big short cover on the nerichardred39 hours ago
5696 ECA got oily with the 5.5 billion acquisition of Newfield. NG looks cheap at crichardred1yesterday
5695Re: ECA When in a swing trade I use the 60 min chart and watch the standard SMAE_K_S-yesterday
5694RE-CLF -Nice rebound from yesterday on the initial merger news. BTW CLF is a Srichardred1yesterday
5693I noticed that. When I looked at their market cap and see they were still burniE_K_S-yesterday
5692It's informative to scan the entire M&A landscape for data points. This Robert O1yesterday
5691Thoma Bravo acquiring Instructure in $2B deal Dec. 4, 2019 8:46 AM ET|About: InE_K_S-yesterday
5690Yes CLF is way, way off of its all-time high...…..Fuzzy-Tuesday
5689Interesting that you brought this Takeover up. I've added TMST TIMKENSTEEL richardred-Tuesday
5688Hi Bob: I've seen their displays in some store before. I of coarse love trichardred-Tuesday
5687I was surprised at the small market cap of each company. CLF $2.3 Bln vs AKS $0E_K_S-Tuesday
5686Hi Rick, Voortman cookies are sold at the cash register in Menards stores (likerobert b furman-Tuesday
5685Cleveland-Cliffs to Buy AK Steel in $1.1 Billion Stock Swap >CLF AKS 6:15 am Fuzzy1Tuesday
5684Hostess Brands to acquire Canadian cookie company Voortman for US$320m Decrichardred1Tuesday
5683GS Acquisition in talks to buy Vertiv for $5B-plus - Reuters Dec. 2, 2019 2:24 PE_K_S-Monday
5682looks like ECA will test recent lows at/near $3.81/share . . will then be a doubE_K_S-Monday
5681Added to ECA today.richardred-Monday
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