Analysts closely follow potential takeover/leveraged buyout (LBO) targets because, on the announcement of a takeover, the target stock usually jumps in price to reflect the premium being paid for the company. If you're interested in this trading strategy, here are some ideas to get you started.
We compiled a list of rumored potential takeover/LBO targets from various sources including CNN Money and iStockAnalyst. We screened these stocks for those from the biotech industry, and then screened for those with the highest net institutional purchases over the current quarter. This indicates that institutional investors such as hedge fund managers expect these names to outperform.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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 these companies are attractive takeover candidates? Use this list as a starting point for your own analysis.
List sorted by net institutional purchases as a percent of share float.
1. InterMune Inc. (ITMN): Focuses on developing and commercializing therapies in pulmonology and hepatology. Takeover/LBO rumor sourced from Minyanville. Net institutional purchases in the current quarter at 8.7M shares, which represents about 16.49% of the company's float of 52.77M shares.
2. Seattle Genetics Inc. (SGEN): Focuses on the development and commercialization of monoclonal antibody-based therapies for the treatment of cancer and autoimmune diseases in the United States. Takeover/LBO rumor sourced from Minyanville. Net institutional purchases in the current quarter at 7.0M shares, which represents about 6.17% of the company's float of 113.40M shares.
3. Savient Pharmaceuticals, Inc. (SVNT): Focuses on developing KRYSTEXXA, a biologic PEGylated uricase in the United States. Takeover/LBO rumor sourced from Minyanville. Net institutional purchases in the current quarter at 5.2M shares, which represents about 9.37% of the company's float of 55.48M shares.
4. BioMarin Pharmaceutical Inc. (BMRN): Develops and commercializes biopharmaceuticals for serious diseases and medical conditions. Takeover/LBO rumor sourced from Minyanville. Net institutional purchases in the current quarter at 4.0M shares, which represents about 3.52% of the company's float of 113.76M shares.
*Institutional data sourced from Fidelity, all other data sourced from Finviz. To access the complete list of takeover targets, click here.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
