Private-equity groups on a tear ?

It now looks like 2005 will be a banner year for private equity funded buyouts. The Wall Street Journal reported today that their share of the M&A activity has already reached a new high of 14% of all buyouts this year.

Now, some are aiming at much bigger deals. A couple of groups have been reported to be building close to $10 billion funds that will be put to work next year. Given the blows some of the retailers have suffered this year, I expect a good deal of that money to go towards taking them private.

A small number of my hits have been private equity led buyouts. While the fact that these are cash deals make them very attractive, the premiums tend to be on the low side.

Here are my retailer picks that these funds will surely find attractive (the ones I own have a * next to them) -

• Sharper Image (SHRP) *
  
• Gap (GPS)
  
• Hot Topic (HOTT)
  
• Ann Taylor (ANN)
  
• Rite Aid (RAD) *
  
• Gymboree (GYMB)
  
• Guess (GES)
  
• Pathmark (PTMK)
  
• Pier 1 Imports (PIR) *
  
• Mothers Work (MWRK) *
  
• Restoration Hardware (RSTO) *
  
• Bombay (BBA) *
  
• La-Z-Boy (LZB) *
  
• Wild Oats Markets (OATS) *
  
• Saks Inc (SKS) *
  
• Tiffany & Co. (TIF) *
  
• Winn-Dixie (WIN) *

Most of the above are still great buys, assuming you are ready to sit on them for a while (> 2 years).