He Spotted These Megadeals Coming Down The Pipes — And Made A Killing
In May of last year, we embarked on a new project that was in the works for months.
It wasn’t our plan to launch it in the middle of a global pandemic when the market was in a tailspin. For that reason alone, it would have been good reason to shelve the project. But instead, we went full speed ahead…
That’s because we had full confidence in what we were doing. In fact, we believed (and still do) that this project was more timely than ever — offering investors the chance to make incredible gains.
As it turns out, we were right.
The project I’m referring to is my colleague Nathan Slaughter’s premium service, Takeover Trader. And since May of 2020, he’s identified trades that have delivered returns of 135%… 150%… 344%… and more — often in a matter of days or weeks.
Now, as you might have guessed from the name — the idea of this service is to identify takeover targets. And while there is no such thing as a crystal ball when it comes to investing, as Nathan’s track record shows, even the rumor of a deal can lead to huge gains.
Fast-forward to today, and Nathan thinks the deal making activity in the market is about to enter an unprecedented phase. And he’s identified a whole new sector that he thinks will be a hotbed of activity in the months to come.
I sat down with Nathan to talk about his Takeover Trader service, what he looks for when identifying targets, what he sees on the horizon for deal making activity — and how we can profit…
2021: The Year Of The Megamerger
You came right out of the gate at a full sprint since launching Takeover Trader last year and haven’t looked back since. Can you tell us about that first pick and what it was like launching this during the height of Covid?
For a lot of us, 12 months ago may feel like 12 years ago. It’s been a challenging time. So it’s hard to believe that around this time last year, when people were stuck at home as the pandemic raged, my staff and I were hard at work putting the finishing touches on the inaugural issue of Takeover Trader.
The pick I ultimately settled on for that inaugural issue was a logistics and trucking firm. The company had gone through a series of acquisitions of its own, creating a powerhouse that wasn’t getting the attention it deserved from Wall Street.
But I liked what I saw. At the time, I said this company would be a no-brainer for Amazon as well as a few other big companies. So I added the stock to my portfolio at $66.18 on May 7. It was a tough call — with businesses (and freight delivery) shut down all around the globe. But it’s safe to say things have gone fairly well since then.
The stock hit a fresh all-time high just a few days ago. Some that is due to the world returning to “normal,” but the big reason is because the firm knew that it is worth more than the sum of its parts — so it announced a deal where it will split into two separate companies.
It’s a good example of the kind of deal where two parties don’t necessarily be involved for it to happen — but the riches still follow, all the same.
I won’t reveal the name of this pick out of fairness to my subscribers. Because I think the once this deal goes down and the two companies are split apart, this will make it even more appealing to a potential acquirer down the road.
Okay, fair enough. Can you tell us about another big win that you’ve cashed out on?
Another example is Twilio (NYSE: TWLO). You know those reservations for your favorite restaurant that you make on your phone? That’s these guys, among other things.
The company was already growing before Covid, but suddenly its services became crucial in a socially-distanced world. On September 16th, 2020, a small group of investors received an alert from me that something big was on the horizon for Twilio. To help power this growth, the company was acquiring the data company Segment.
Almost overnight, the share price began to shoot up — and continued its climb for the next month. Now the deal wasn’t actually completed until November, but it didn’t matter. The stock went on an amazing run. We ended up closing out on October 12th with a gain of 49.8% — in less than a month.
You’ve said before that you don’t always have to be “right” about a deal — you just have to spot a potential deal before the crowd. Can you explain?
By the time you read about the possibility of a mega-merger in the news, the real action — and the real profits — are usually long gone. So you want to be able to spot two companies that could “tie the knot” before the rest of the world catches on.
As I’ve said before, nobody has a crystal ball. But after decades of investing experience combined with relentless digging and a maniacal analytical approach, I’ve built a system that’s the next best thing. And that’s led me to identify likely takeover targets… before they hit the headlines. And a lot of times, that’s good enough.
Take Roku (Nasdaq: ROKU), for example. In June of last year, the media started openly discussing rumors of Google buying the streaming media hardware maker. It just made too much sense. All that data Roku was collecting would be a dream for the advertising arm of Google, which is a gold mine of it’s own already.
There were no official announcements from either company. Everyone was just guessing. But before they even wrote those headlines… I had already alerted investors to stake their claim in ROKU.
The result after the rumors hit? A 343.93% return.
I saw this potential mega-merger coming long before it ever crossed the minds of mainstream media. Sometimes, that’s all it takes.
What’s one company you have your eye on right now?
Well, I normally reserve my top picks for my premium subscribers only, as you can understand. That said, one name I’m watching closely is DocuSign (Nasdaq: DOCU), which is soaring once again after smashing first-quarter earnings expectations.
As the name implies, DocuSign is a leading player in the eSignature space. If you haven’t signed your John Hancock virtually to an electronic document yet, it’s probably only a matter of time. I’ve had the stock on my radar for a while, but valuations were a tad excessive for my taste.
A recent dip in the stay-at-home sector of the market has brought this one back in reach though.
Revenue for the period climbed nearly 60% from a year ago to hit $469 million, driving earnings to $0.44 per share. Better still, management issued enthusiastic guidance for the remainder of fiscal 2021. It was a classic beat-and-raise quarter. I was most impressed with free cash flow, which has risen four-fold over the past 12 months to $123 million.
In other words, this high-margin business is converting every dollar of revenue into more than a quarter of cash profits. That’s in the market’s upper echelon.
There’s a decent chance this well-positioned takeover target may be join my portfolio in the next few weeks.
I want to talk about your process for finding deals, but we’re running short on space and time for now. So if you could pick one sector to focus on for deals over the next year, what would it be?
I can’t think of another sector with such a long and wide growth runway as healthcare. Trillions of dollars are being thrown around with no signs of slowing. Opportunities abound, from tiny biotech drug developers to surgical device and lab instrument makers to the insurers cashing all those monthly premium checks.
Of course, this sector is also ripe for buyouts. Take the pharmaceutical industry. Facing the loss of patent protection for core products, deep-pocketed drug makers are gobbling up smaller firms with exciting new therapies to rejuvenate their pipelines.
GlaxoSmithKline (NYSE: GSK) struck first with the purchase of oncology-focused Tesaro. Bristol Myers Squibb (NYSE: BYM) responded with the $74 billion acquisition of Celgene. Eli Lilly shelled out $235 per share (a 68% premium) to scoop up Loxo. Not to be outdone, Abbvie (NYSE: ABBV) decided to team up with Allergan.
These won’t be the last such deals. But I’m steering the attention of my subscribers to a different corner of the healthcare world…
We live in an era of Facetime, Skype, and lightning-fast 5G internet connections, where video chats with remote friends and family can be done with the click of a button. You might even be one of the millions who dial into regular weekly teleconferences with coworkers.
Why not consult with your doctor or healthcare provider the same way?
At this point, just a tiny fraction of Americans (around 2%) has taken advantage of telemedicine. But what was once a curious novelty is rapidly becoming a mainstream service. COVID-19 helped enable the adoption, and that penetration rate will most certainly climb. For example, 90% of all mid and large-size employers now offer some type of telemedicine option. The convenience, cost savings, and potential to relieve overworked emergency rooms are just too significant to ignore.
I won’t bore you with a bunch of statistics on this… But here’s the key one you need to know: the global telemedicine industry generated about $34 billion in revenues last year. But as the technology expands into new arenas (including dermatology, cardiology, and psychiatry), that total is expected to climb at a 24% compounded annual growth rate (CAGR) — skyrocketing to $185 billion by 2026.
Editor’s Note: Nathan thinks we’re about to see a wave of deal making activity in the coming months as the economy emerges from the pandemic — and you’ll want to make sure you’re prepared before it’s too late…
That’s why, hot on the heels of an amazing winning streak, Nathan and his team have produced a brand-new research report dedicated to this new wave of deals. You’ll learn more about the megamergers in healthcare that he thinks will happen in the coming months… As well as potential deals in other sectors that could deliver triple-digit gains practically overnight.