At first glance, the economic climate would appear to be just right for an M&A boom. For one, we're coming off a six-month global acquisitions streak that saw record takeovers back in August, and credit conditions are even better now than they were back in April.
And with many companies boasting healthy balance sheets and readily available funding, they're in prime position to execute acquisitions. But even while company financials may be up, overall confidence has been shaken by concerns over currency and government regulation, conditions that may very well put a damper on M&A activity.
According to the Ernst & Young Capital Confidence Barometer, only about 29% of companies surveyed are actively seeking acquisition targets -- that's down from 38% six months ago. Many companies may instead opt to allocate their resources on organic growth, through restructuring and taking measures to improve performance.
Which isn't to say that takeovers are altogether off the corporate agenda -- but at the current moment, there's a good deal of reluctance to rock the boat.
So how do you find companies with confident executives, who believe in the growth potential of their companies -- regardless of whether or not they're acquired? You may want to have a look at insider buying. If executives are willing to use their own money to buy their employer's stock, it's a pretty strong vote of confidence in the company's outlook.
Here's a list of five takeover targets seeing insider buying. To compile this list, we started with a universe of takeover targets identified by sources like CNBC, UBS, Merrill Lynch, Barrons, Morningstar, and Street Insider. We then narrowed down the list by only focusing on those stocks in the starting universe that have seen insider buying over the last few weeks. (Click here to access free, interactive tools to analyze these ideas.)
Insider trading data sourced from AOL Money. The list has been sorted alphabetically.
|
Company |
Publication / Analyst That Named Company a Takeover Target |
Insider Transactions |
|---|---|---|
| Dell (Nasdaq: DELL) | Barrons | Samuel Nunn (Director) bought $199,917 worth of stock on 9/17 |
| Diamond Foods (Nasdaq: DMND) | Street Insider | Insiders like Michael Mendes (CEO), John Gilbert (Director), Linda Segre (Officer), Stephen Kim (General Counsel) and Steven Neil (CFO) collectively bought $370,400 worth of stock between 10/7-10/14 |
| ITT Educational Services (NYSE: ESI) | John Dorfman | Blum Capital Partners (10% Owner) has acquired $17.23M worth of stock between 9/8-10/15 |
| Exelixis (Nasdaq: EXEL) | Morningstar | Lance Willsey (Director) bought $130,470 worth of stock on 9/7 |
| Smithfield Foods (NYSE: SFD) | Street Insider | Larry Pope (CEO) bought $224,705 worth of stock on 10/8 |
| ValueClick (Nasdaq: VCLK) | UBS | David Buzby (Director) bought $281,627 worth of stock on 9/15 |
Interactive Chart: Press Play to see how analyst ratings have changed for all the stocks mentioned above.
Disclosure: Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
