2014 will be the year of the deal.
Private equity and hedge fund managers are on the prowl looking for bargains. With the easy money made in the market over the last few years, investors might be wise to follow the lead of these institutional managers.
In preparation for the onslaught, corporations are not sitting idly by.
Hertz (HTZ) initiated a poison pill strategy that kicks in when any investor acquires up to 10% of outstanding shares. The news sent shares soaring – not for the defense against activist investors, but the realization that Hertz cannot stop them when they arrive.
Like clockwork shortly after Hertz’s move, Carl Icahn opened a position in the stock. This is a follow-up to activist investors already owning stock in the company.
As for specific targets, it is easy to see where a company might be vulnerable. To the extent shares trade for a discounted valuation, consider the stock in the crosshairs.
Whether the outcome is activist investors making and demanding changes in strategy or the private-equity route of taking the company out entirely, the endgame for investors is appreciation in stock value.
While you might not make a huge windfall, you can score a quick 10-20% gain or more with these plays.
As such, it pays to identify these takeover targets in advance.
Here are 3 to consider for your portfolios today: