Topic: Wealth Management

Stock trading advice: Maximize your profits with our takeover stocks

Stock trading advice: Mosaid Chip Image

Investors often ask how we have managed to recommend so many stocks over the years that get taken over. One key is that we aim to recommend stocks with hidden assets — assets that attract less investor attention than they deserve.

That gives buyers a bargain. It also attracts takeover bids.

Stock trading advice: The hidden asset that gave us a takeover double

Identifying hidden assets allowed us to achieve a “takeover double” on Mosaid Technologies, a recommendation of our Stock Pickers Digest newsletter.

Mosaid mainly licenses computer chip and telecommunications technology, including patents for technology used in smartphones and laptops.

We first recommended Mosaid in our May 2010 issue of the newsletter at $22.18. The recent takeover of this stock gave us a 107.4% gain in just 18 months. Here’s how it happened.

While not a widely followed stock, Mosaid had a key hidden asset in its patents. It holds about 1,651 patents as well as 996 patent applications.

When we first recommended Mosaid, we recognized that patents would become increasingly important to technology companies. That’s because they let them protect their market shares from rivals. Owning a large number of patents can also help established leaders keep out new competition.

What’s more, a large patent portfolio gives technology companies the material they need to launch countersuits to defend themselves against patent infringement lawsuits.

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This summer, Mosaid became the object of a bidding war.

It was launched when Wi-LAN (Toronto symbol WIN) made a hostile bid of $38 a share. Subsequently, Wi-LAN sweetened the bid by 11% to $42 a share.

The bidding war came to an abrupt end when private equity firm Sterling Partners made a friendly bid of $46 a share.

On October 27, 2011, Mosaid accepted Sterling’s bid and we recommended that our subscribers tender to that bid. The takeover was complete and so was our takeover double.

If you are looking for proven stock trading advice on aggressive growth stocks – including takeover candidates – you really should have a subscription to Stock Pickers Digest.

You can save $50.00 off the regular rate with our introductory subscription (exclusively for new subscribers). The latest issue gives you our very latest analysis—and clear buy/sell/hold advice—on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. Click here to take advantage of our special subscription offer.

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