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M&A Hunt Continues

Deal185The tech IPO market is hot, but these aren’t the only big market deals going on.

Consider Toll Brothers (TOL) and its $1.6 billion buyout of Shapell Industires, immediately on the heels of Tri Pointe Homes (TPH) forging a $2.7 billion alliance with a Weyerhaeuser (WY) division.

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).

Article printed from InvestorPlace Media,

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