Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:
Cashing In on Deal Stocks by Christopher C. Williams
Summary: Two members of Barron's famed Roundtable cashed in early on their picks as companies they touted in 2006-2007 were bought out for healthy premiums (see Roundtable summary). Barron's asked them what they plan to use their 'winnings' to buy:
1) John Neff, who touted Lyondell Chemical Company (LYO) at $25 and cashed out at $48 on a buyout said he's buying Citigroup Inc. (NYSE:C). He says shares could be "20% to 25% higher as things unfold this year and next." He's also keeping some of his LYO shares in case the deal falls through, or another buyer emerges.
2) Two of Mario Gabelli's top picks, Hilton Hotels Corp. (NYSE:HLT) and Sequa (SQA.A), were taken private recently. Gabelli says we're only in the 'afternoon' of the current M&A boom. United States Cellular Corp. (NYSE:USM) could be a prime target as consolidation makes its way through the telecom sector, he says. Sensient Technologies Corp. (NYSE:SXT), which makes colors and flavors could be taken out for $32 (an 18% premium) by a foreign interest within the year. And self-lubricating bearing maker Kaman Corp. (NYSE:KAMN) could see shares go from $34 to $45 to $65 over the next two years as suitors put a premium on its aerospace components.
Related Links: Kaman Has Segment Schizophrenia • Mario Gabelli: Aircraft Supplier Kaman Will Outperform (KAMN) • Sensient Technologies: Pretty Colors, Nice Smells -- And Earnings Growth • Telephone and Data Systems On A Roll