Hit #168 (Acxiom)

Acxiom (ACXM), which has had buyout offers before, finally seems to have received a bid that is likely to go through. A $2.25 billion cash offer from ValueAct Capital and Silver Lake Partners is the latest one. Business Week has a story on how this is turning into a battle between hedge funds, with another large holder Millbrook Capital Management thinking, rightly in my opinion, that this offer grossly undervalues the future potential.

The current offer of $27.1/share makes for a gain of 14.98% over my average cost of $23.57, but the final price may be somewhere close to $35 before this battle is over.

I had mentioned Acxiom repeatedly in the past - in a note on defense/security targets and again in a post on Engineered Support Systems' takeover by Boeing.

A player in a related sector, Choicepoint (CPS), could also become a target down the road. The stock isn't cheap today, and a pullback is needed before I can consider opening a position.

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Previous hit - ecollege (#167)

Hit #167 (eCollege)

Online education enabler, eCollege (ECLG), is being bought by Pearson for around $530 million in cash. The $22.45/share offer makes for a gain of 13.1% over my cost/share of $19.85.

I have been waiting for this for a while now, though a higher price would have been more welcome! Given rival Blackboard's relative success, eCollege had to settle for less.

Few others in this or related education/skills monitoring sector look attractive. These include Plato Learning (TUTR), Renaissance Learning (RLRN), SkillSoft (SKIL) and Princeton Review (REVU). Among these Plato has been on my watchlist for a while, though I have not bought any shares yet.

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Previous hit - 21st Century (#166)

Hit #166 (21st Century)

21st Century (TW) finally got a higher offer from AIG as expected. I had posted on this deal earlier. The new cash offer, of $22/share, represents a gain of 48% over my cost/share of $14.86.

21st Century is among those few stocks that I bought after an all-round great experience as a customer. The insider buying and the dividend played a part as well. 3 years running as a customer, and still not much to complain! A good portion of the the gain came from (reinvested) dividends.

Others like Arthur J. Gallagher (AJG) and to a lesser extent, Progressive Corp. (PGR), look attractive for long-term holders. AJG sports an attractive dividend of 4.3%.

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Previous hit - Sallie Mae (#165)

Hit #165 (Sallie Mae)

Sallie Mae (SLM) is being bought by a consortium that includes Bank of America, J.P. Morgan Chase and J.C. Flowers, for $25 billion in cash. The offer, of $60/share, makes for a profit of 58.9% over my average cost of $37.75. The deal may yet be in trouble, as noted here, but in the worst case the offer price will be reduced, and the sale itself is not likely to fall through.

The student loan sector is under a cloud with investigations into various practices. That still did not prevent a spike in competitor Student Loan Corp. (STU) 's shares. STU may receive a bid of its own, but the stock looks expensive now.

Another lender that has its share of troubles is First Marblehead (FMD). A bit risky than the rest, given that this is not seen as a takeover target, this could well be a better long-term bet than STU. I have added FMD to my watchlist, and will be waiting patiently for the right moment to open a position.

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Previous hit - First Data (#164)

Hit #164 (First Data)

First Data Corp. (FDC) is being acquired by KKR in one of the largest cash buyouts ever, for $29 billion. The offer, of $34/share represents a gain of 112.5% over my average cost of $16/share, adjusting for the recent spinoff of Western Union. In a post almost 2 years ago when Intercept (Hit #22) was acquired, I had noted that First Data was undervalued, though I suggested that it was too big to be a takeover target!

The offer frankly seems a bit on the low side. FDC, like Sungard Data (Hit #36) earlier, makes for a good private equity flip candidate.

Another player in this sector, Alliance Data (ADS) got a bid earlier this week from Blackstone. At this point, the remaining players, Fiserv (FISV), Total System Services (TSS), EFunds (EFD), are all trading at expensive valuations. EFunds had recently announced that it is exploring a sale of the company.

Electronic Clearing House (ECHO), could be a good bet, though a speculative one. The earlier offer from Intuit fell through, and the stock has since pulled back substantially.

I have owned a few Fiserv shares for sometime, and bought into ECHO recently.

Western Union (WU), despite being dumped by Buffett recently, is a good long-term bet, as international transfers spike. Someone like Citibank or HSBC may end up buying them eventually, if only for the huge user-base. If you would rather not bet on one horse in a sector, I would recommend buying both Western Union and Moneygram (MGI) shares for the long haul. In an earlier post on the urge to diverge, I had written more on investing in spinoffs.

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Previous hit - MedImmune (#163)