On any day in the market, there will be rumours of which company will be taken over. Some of the rumours are just that rumours, some of the rumours are based on truth because there is accumulation  of shares for investment purposes. The investors believe for a variety of reasons the company’s share price is low or undervalued by the market. In this area of investing, there are some well known names of hedge funds and names of people who you will consistently see that have varying degrees of success. Some investors will try to work with management, some will want new management, some will want Board seats and almost all just want to be bought out at higher prices than they paid.

Linking to dividend producing stocks, one method to play the game is when you look for takeover stocks add the provision the company pays a dividend first. In every industry grouping, there are undervalued stocks – very often with a good reason. Fortunately some of the undervalued companies pay a dividend. If they are undervalued for a long time, at some point, a larger company will wish to buy them for strategic reasons and the shareholders will receive a premium on what the stock is trading at. If the compay was paying a dividend, the investor has achieved two rewards their dividends and a healthy capital gain.

There are always more questions than answers, till the next time – to raising questions