Profit from takeovers

Article Excerpt

Two more of our buys — Swift Transportation and Agere Systems — have attracted takeover bids, raising our takeovers to a total of 10 for the year. (Our other 2006 takeovers were Mercury Interactive, ACE Cash Express, Russell Corp., Sico Inc., Vincor International, VFC, Dofasco and Geac.) Investors often ask how we manage to recommend so many stocks that get taken over at a big profit. One key is that we aim to recommend stocks with hidden assets — assets that attract less investor attention than they deserve. That gives buyers a bargain, and that attracts takeover bids. Some assets stay hidden indefinitely. But stocks we recommend have added pluses such as long-term growth prospects or a reasonable ratio of price to current earnings. That way you get the best of all investment odds: heads-you-win, tails-you-break- even. When you win, profits can be extraordinary. When you lose, you really don’t lose that much. much…

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