chapter 9
Takeover targets
‘A bias towards medium and smaller companies will help your odds of holding companies that get taken out’
One of the nice things about owning shares is that occasionally they get bought out at a premium. The average premium on a buy-out is 25–30 per cent above the last trading price and sometimes, particularly if there is competition, the bid premium can be considerably above this. I believe that by identifying shares that are more likely to be bid for, an investor can increase the odds of shares in their portfolio becoming targets.
It is rare for mega-cap stocks to be bid for and therefore a bias towards medium and smaller companies will help your odds of holding companies that get taken out. This may seem obvious ...
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