Dear Reader,
Happy Friday!
We’re coming around to New Year’s Eve next week, which I’m looking forward to.
And then we start a new year together!
Today, I want to talk about takeovers.
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I like to use a strategy I picked up on Wall Street called “merger arbitrage.”
This means, when company A buys company B we recommend company B and capture gains before the deal closes.
The trade happens between the announcement of a deal and the closing of the deal.
This is a great strategy for producing consistent gains with pretty low risk (our track record is near 100% on these).
A second takeover strategy we use is looking at industries that are consolidating, meaning a lot of mergers are happening – there’s a lot of takeover activity.
It may be that the industry feels pressure to create economies of scale to better compete.
And we look at companies in these industries that meet our criteria as takeover targets.
Now, when I look at our year in review for our Takeover Targets service, we’ve had a 19% average gain per trade.
That’s lower than our 62% average in Breakthrough Wealth (by the way – if you haven’t used your $500 credit yet, click here to get it before it’s gone.)…
And our 48% average gain in Biotech Insider, and our 52% average gain on our Behind the Markets newsletter.
But, Takeover Targets isn’t designed to be like those other services. For one, you have more trades.
Takeover Targets goes out every week.
And, we have a near-100% win-rate coming up on 5 years running.
Takeover Targets is designed to generate something that looks more like income…
It’s safer recommendations for more income-oriented investors.
A lot of folks, when they retire, look to supplement their income.
Don’t get me wrong – this is not income per se, but it’s designed to mimic that.
A lot of retirees, I observed, weren’t happy with how much they were making every month with Social Security and their retirement nest eggs.
So a lot of folks in my business started doing these option services, writing calls and collecting income.
Well, that’s complicated. The people I talk to tell me that’s like Chinese arithmetic to them…
They don’t get it, and they don’t want to be sitting in front of their computer all the time trying to figure this out at 65 years old.
So I thought to myself, gosh, merger arbitrage is a great way professional investors on Wall Street make money.
And it’s easy – it’s simple stock investing that lends well to generating something that seems close to “income.”
So that’s why I created Takeover Targets.
And frankly, when you look at these fancy options services, our consistent 19% average gains per trade, actually outperforms them.
So that’s number one…
Number two, nobody else is doing anything like this to my knowledge. Not for the public.
Warren Buffett and billionaires use this strategy. But last I looked, no one else is sharing it with regular investors.
Now, as you know I’ve been using this week to do an honest review of all our services.
So, in keeping with that theme, I have to tell you about the dumbest trade I made all year…
Which happens to be our one and only loss in Takeover Targets this year.
So, I’ll tell you about that in a minute – I’ll tell you the best and the dumbest, which were both Takeover Targets trades.
The best idea we had all year was Telephone and Data Systems (SYM: TDS).
We recommended it at $16.80. Now it’s around $35 – at least, it was yesterday.
This is a good example of the things we look for:
We have a special situation where management is basically being pressured to sell the assets of the company.
So, there’s going to be a takeover of US Cellular and other assets TDS has, and in the process of this company being peeled apart we’ve seen good returns.
Now, the dumbest decision I made this year – the only loss – so irritating…
I don’t think we took a loss last year at all in Takeover Targets, or the year before, so very irritating…
The dumb trade that ruined an otherwise perfect track record!
Here it is:
Spirit Airlines.
I recommended it after JetBlue tried to take the company over.
And that cost us – it was down 45% when we sold. Such a bummer.
I thought the deal was going to happen. I didn’t see overlap and I was dead wrong. I misperceived that one.
Argh! I’m going to be wrong once in a while. It’s just the nature of the thing.
But what I’m really excited about with Takeover Targets is…
We’ve been bobbing and weaving the last couple years…
The Biden administration has been holding mergers back…
Making every single freaking merger a fight.
Like Activision Blizzard.
There have been some good stocks I haven’t recommended because I was afraid the Biden Justice Department would just fight and fight and we’d end up in a situation like we were with Activision Blizzard…
Where we recommended it in July 2022 and had to wait till 2023 with legal fights all over the world…
Microsoft bought them out and we made our 31.8% return but we had to sit there over a year watching it go up and down as the Biden administration tried to stop it.
So I’m really optimistic about what 2025 will bring.
Because by all accounts, blunt force logic says takeovers are going to go bonkers in 2025.
The incoming Trump administration should be very good for this service.
I’m really looking forward to that!
So, if you like the idea of consistent gains using a system with a near-perfect track record, check out Takeover Targets.
Go here to see our 21 “Deal Triggers” for picking takeovers.
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