Takeover keys

Article Excerpt

Another one of our buys — Baffinland Iron Mines — has attracted a takeover bid. Investors often ask how we have managed to recommend so many stocks over the years that get taken over. 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. It also attracts takeover bids. While not a widely followed stock, Baffinland has huge reserves of ore so pure at 65% iron that the only on-site processing it will need is crushing and screening. As well, the company has already signed contracts to sell the ore to steelmaking giants Thyssen-Krupp and ArcelorMittal. Baffinland also holds $25 million in cash to fund exploration and development. 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…

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