Tuning In to the Takeover Buzz
Editor's note: This is a special bonus column for readers of RealMoney and TheStreet.com. This piece originally was sent to Stocks Under $10 subscribers at 12:10 p.m. EDT on May 26. Sign up now to find out more about the TSC Investment Team's strategy and get an email alert before every trade. Just click here.
To read Jim Cramer's take on Siebel Systems, click here.
We have had our eye on Siebel Systems (SEBL) for some time as a potential takeover target in the struggling software space. The Wall Street Journal's "Heard on the Street" column highlighted the pros and cons of the Siebel story Thursday morning, and while we aren't taking any action on the story, we are going to add the stock to our watch list and look to take action on a pullback to $8.50 a share. The stock was recently trading at $9.35.Inflection-point play Siebel hit our radar screen as a low-dollar way to gain access to strong growth in customer relationship management (CRM) software. We believe shares have as much as 25% upside over the next three to 12 months as investors speculate on a potential takeover bid. Siebel is the leading CRM provider. Its technology allows Fortune 500 companies such as 3M (MMM) to better manage customer data and automate customer support services. But the company faces stiff competition from the likes of salesforce.com (CRM), which is growing its user base at a rapid clip, and Siebel's management has struggled to find a good use of its $2.25 billion cash hoard. It has said it will look to invest in the business as opposed to paying a large one-time dividend. Tough competition, coupled with some earnings hiccups, has led to a 10% decline in Siebel shares over the past year. We believe there is more value to Siebel's business than investors are currently pricing into Siebel's stock, and that the upside from the potential for the company to go private or be taken over by acquisition-hungry Oracle (ORCL) far outweighs downside in the business from current levels. The recent action by corporate activist Carl Icahn, who took a 4.5-million-share position in Siebel on May 13, and who has a history of bringing out value in his investments, confirms our view. Icahn loves to get involved in companies that are wreckable, meaning he only puts his money behind companies that he believes are worth more dead than alive. We believe this practice holds true with Siebel.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV