M&A Hunt Continues
This is on the heels of a massive $7.2 billion buyout of electronics firm Molex (MOLX) by Koch Industries in September and a host of other massive deals earlier in the year — led by the $28 billion Heinz buyout orchestrated by Warren Buffett and Berkshire Hathaway (BRK.A, BRK.B).
Last year there were only seven deals worth more than $5 billion, yet in 2013, we’ve already seen six that are worth $10 billion-plus — showing that big-ticker mergers and acquisitions are en vogue.
What does this mean for traders, then?
Well, buying small caps in the hopes of buyouts is one way to play this trend — though instead of picking individual companies, you might be better served by casting a wide net with small-cap funds.
Biotech is always red-hot when it comes to M&A, so the SPDR S&P Biotech ETF (XBI) is a good sector to camp out in. Otherwise, you might want to broadly play small-cap buyout targets via a fund like widely held iShares Russell 2000 Index (IWM).