There are more than 300 takeover rumours every year. The stocks that were the subject of takeover rumours initially jump by an average 2.9% but lose 1.2% in the following month. The reason is simple. Only about 15% of takeover rumours are real and the remaining 85% are just speculation. Insider Monkey discussed a strategy that will return 22% annually by shorting takeover rumours.
In general it doesn’t make sense to blindly buy all the stocks that are subjects of takeover rumours. However, in certain cases buying these stocks in advance of takeover announcements may yield enormous returns. We believe imitating hedge funds may be one of the safer ways of playing takeover rumours. Compared with individual investors, hedge funds have access to better resources and they can assess the odds of takeover rumours more accurately. That’s why we compiled the list of stocks that were subjects of takeover rumours – and that hedge funds already have significant investments in. Here are 8 takeover rumours hedge funds are betting on: