9 Takeover Targets Being Chased by the Smart Money

Following the economic collapse 2008, confidence in the M&A market took a nosedive and never really rebounded. But according to the Annual M&A Outlook Survey, conducted by U.S.-based law firm Dykema, sentiment amongst industry leaders is finally shifting from outright pessimism to cautious optimism.

The general consensus of those polled was that organic growth alone won't suffice to meet the needs of strategic buyers. And in the opinion of these respondents, companies with extra cash on their balance sheets are likely to capitalize on depressed share prices.

A good 38% of those surveyed feel that the market will only continue to grow stronger over the next year -- compare that with the results back in 2008, when only 16% were so confident. But perhaps the most telling statistic is that only 10% of industry leaders today think that the M&A market is on the wane.

This means that according to those in the know, there's limited downside to the M&A market. Which makes takeover targets particularly attractive to institutional investors, who spend most of their time minimizing the potential downside of their investments. And if the smart money is following a company, it's a good indication that it's worth more than just its acquisition value.

Which takeover targets are seeing the largest institutional inflows? To compile this list, we started with a universe of takeover targets identified by sources like CNBC, UBS, Merrill Lynch, Barron's, Morningstar, and Street Insider, and then narrowed it down by focusing on the stocks that have seen significant institutional buying over the past three months. (Click here to access the entire universe of takeover targets.)

Here's the Kapitall list of nine takeover targets being chased by the smart money. (Click here to access free interactive tools to analyze these ideas.)

Company

Publication / Analyst That Identified Company as a Target

Shares Held by Inst. Investors Today

Shares Held by Inst. Investors 3 Months Ago

Change

Quiksilver (NYSE: ZQK  ) UBS

118,379,330

86,966,751

36.12%

Cedar Fair (NYSE: FUN  ) Street Insider

33,999,201

27,412,915

24.03%

Seagate Technology (NYSE: STX  ) Barrons

499,861,640

403,117,171

24.00%

SuccessFactors (Nasdaq: SFSF  ) Street Insider

88,059,581

77,492,583

13.64%

Applied Signal Technology (Nasdaq: APSG  ) Street Insider

10,925,813

10,048,443

8.73%

Extra Space Storage (NYSE: EXR  ) UBS

81,368,293

75,460,655

7.83%

Terremark Worldwide (Nasdaq: TMRK  ) Barrons

39,234,168

36,420,394

7.73%

Cott (NYSE: COT  ) Wall Street Journal

64,438,967

59,935,310

7.51%

Rubicon Technology (Nasdaq: RBCN  ) UBS

29,887,769

27,984,785

6.80%

Institutional data sourced from Reuters. The list has been sorted by the change in institutional ownership over the past three months.

Interactive Chart: Press Play to see how analyst opinion has changed on all the stocks mentioned above.


Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

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