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Investors and analysts speculate about companies that may be taken over, because when a company announces that it is being taken over, its stock usually jumps in price to reflect the takeover premium being paid. This is usually a very profitable event for shareholders.

With this idea in mind, we compiled a list of potential takeover/leveraged buyout (LBO) targets from various sources including CNBC and Investor Place. We then screened these names for those that short sellers expect to outperform, with significant decreases in shares shorted month-over-month.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. (To access a complete analysis of this list's recent performance, click here.)

Do you think short sellers anticipate any of these companies will be taken over? Use this list as a starting point for your own analysis.

1. Advance Auto Parts Inc. (NYSE:AAP): Operates as a retailer of automotive aftermarket parts, accessories, batteries, and maintenance items. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have decreased from 5.12M to 3.17M over the last month, a decrease which represents about 2.69% of the company's float of 72.45M shares.

2. Arris Group Inc. (NASDAQ:ARRS): Develops, manufactures, and supplies telephony, data, video, construction, rebuild, and maintenance equipment for the broadband communications industry worldwide. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have decreased from 10.28M to 8.56M over the last month, a decrease which represents about 1.52% of the company's float of 113.40M shares.

3. BioSante Pharmaceuticals, Inc. (BPAX): Develops products for female sexual health and oncology. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have decreased from 20.21M to 16.67M over the last month, a decrease which represents about 3.32% of the company's float of 106.47M shares.

4. IAC/InterActiveCorp. (NASDAQ:IACI): Engages in the Internet business in the United States and internationally. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have decreased from 4.41M to 2.39M over the last month, a decrease which represents about 2.71% of the company's float of 74.65M shares.

5. J. C. Penney Company, Inc. (NYSE:JCP): J. C. Penney Company, Inc., through its subsidiary, J. C. Penney Corporation, Inc., operates department stores in the United States and Puerto Rico. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have decreased from 30.60M to 28.60M over the last month, a decrease which represents about 1.36% of the company's float of 147.33M shares.

6. Monolithic Power Systems Inc. (NASDAQ:MPWR): Designs, develops, manufactures, and markets analog and mixed-signal semiconductors. Takeover/LBO rumor sourced from EE Times. Shares shorted have decreased from 1.39M to 1.09M over the last month, a decrease which represents about 1.01% of the company's float of 29.69M shares.

7. Power Integrations Inc. (NASDAQ:POWI): Designs, develops, manufactures, and markets proprietary, high-voltage, analog, and mixed-signal integrated circuits in the United States and internationally. Takeover/LBO rumor sourced from EE Times. Shares shorted have decreased from 3.10M to 2.75M over the last month, a decrease which represents about 1.27% of the company's float of 27.64M shares.

8. Collective Brands, Inc. (NYSE:PSS): Engages in the wholesale and retail of footwear and related accessories worldwide. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have decreased from 14.87M to 13.48M over the last month, a decrease which represents about 2.54% of the company's float of 54.72M shares.

9. Sears Holdings Corporation (NASDAQ:SHLD): Operates as a retailer in the United States and Canada. Takeover/LBO rumor sourced from Seeking Alpha. Shares shorted have decreased from 14.22M to 13.17M over the last month, a decrease which represents about 2.57% of the company's float of 40.80M shares.

10. Stage Stores Inc. (NYSE:SSI): Operates as a specialty department store retailer that offers branded and private label apparel, accessories, cosmetics, and footwear for women, men, and children in the United States. Takeover/LBO rumor sourced from CNBC. Shares shorted have decreased from 4.41M to 3.88M over the last month, a decrease which represents about 1.79% of the company's float of 29.56M shares.

Short data sourced from Yahoo! Finance; all other data sourced from Finviz.

Source: 10 Takeover And Buyout Targets With Significant Short Covering