BAIT SHOP Versus Barron’s on LBO Names

by Jon C. Ogg

Stock Tickers We Reviewed: ALTR, XLNX, KBH, WCI, DHI, LEN, HOV, TOL, VLO, AVP, BJ, COST, NKE, GPS.

This weekend Barron’s ran their "We are reporting on every buyout candidate too" story.  Most is based on what others are saying, so investors should know that these names have almost certainly already been sent out to private clients of each firm.

We have some thoughts on these, and after providing some of the names from the article you will see some of the commentary along with opinions and other data on some of the stocks.

Morgan Stanley strategist Henry McVey believes a $50 Billion leveraged buyout is possible. McVey says that some of the large companies that could possibly be taken private are:

Gap (GPS) (see comments below),
Micron Technology (MU),
Bed Bath & Beyond (BBY),
Nike (NKE) (see comments below),
Liz Claiborne (LIZ),
EMC (EMC),
Costco (COST) (see comments below)

The article also suggested that the LBO boom will continue and points out that Avon Products (AVP) has been the subject of buyout rumors as well. See comments below.

Christopher Ferrara, an analyst at Merrill Lynch, has Kimberly-Clark (KMB) and Estee Lauder (EL) at the top of his list; potential targets in the Energy sector include:
Apache (APA),
Valero Energy (VLO) (see comments below),
Hess (HES),
Transocean (RIG).

While nearly all of the home builders have been mentioned as buyout candidates, Barron’s listed (see comments below on whole group):
KB Home (KBH),
DR Horton (DHI),
Lennar (LEN),
Toll Brothers (TOL),
MDC (MDC),
Hovanian Enterprises (HOV)

Lastly in the Technology sector, CreditSights sees several chip and technology targets:
Linear Technology (LLTC),
Maxim Integrated (MXIM),
Analog Devices (ADI),
Altera (ALTR) (see comments below),
Xilinx (XLNX) (see comments below).

While the article is good in the sense that it is giving more names out there for potential plays, almost all of these have already been speculated on recently and many have been noted this way in the past.  These firms do not give this out to Barron’s before they send these to clients, and many of these names are almost on a “perma-buyout potential list” out there.

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Jon C. Ogg
November 27, 2006