If you've been holding your breath in anticipation of an ARM Holdings (Nasdaq: ARMH) buyout, you can get some oxygen right now. Go ahead, I'll wait.

ARM's stock has seen an unbelievable 167% return over the last year, including 81% in just six months. Some of that performance is based in terrific business as Marvell Technologies (Nasdaq: MRVL), Samsung, QUALCOMM (Nasdaq: QCOM), and even Apple (Nasdaq: AAPL) design processors based on ARM's technology to power modern smartphones and tablet computers. But a P/E ratio north of 80 times trailing earnings and 40 times 2011 estimates points to something else behind the raging rise as well: buyout speculation.

A spate of recent insider sales would indicate that no buyout talks are happening, though. For one, an ARM manager selling stock now with the knowledge of a coming buyout premium would not be particularly brilliant; for another, regulations would limit that sort of activity in the quiet period you'd expect around a wholesale acquisition. Moreover, that frothy valuation makes any buyout very expensive. Even a deep-pocketed buyer would have a hard time defending an ARM deal at these tremendously generous valuation levels.

And then there's the fact that selling ARM to one of the expected bidders would clip the whole business at the kneecaps. Like TIBCO Software (Nasdaq: TIBX) in business software, ARM prides itself on its independence amid a sea of proprietary solutions. If Apple or Samsung were to buy the company, what are the chances of Marvell and Texas Instruments (NYSE: TXN) returning to ARM for another round of technology licenses? While the companies have significant investments designing around ARM's technology, there's other companies like MIPS Technologies (Nasdaq: MIPS) standing by to don ARM's fallen chip license regalia in a heartbeat. And ARM would suddenly look even more expensive when you remove the multi-customer licensing strategy.

This could be a great time to take some profits if you're holding ARM shares, or to take a negative position in options or short sales if you don't. I'll settle for an "underperform" CAPS rating, and you're welcome to follow my lead -- or take the opposite position if you think I'm wrong.

Fool contributor and All-Star CAPS player Anders Bylund holds no position in any of the companies discussed here. Apple is a Motley Fool Stock Advisor pick. The Fool owns shares of Marvell Technology Group and Qualcomm. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.