) -- Cash is a real problem for companies right now -- and no, that's not a joke.
You know how too much of a good thing isn't so good? Well, cash works like that too. Cash is certainly a good thing for a liquidity-strapped firm that needs to make its next interest payment, but for a company that's got coffers overflowing with cash, it can present a real problem. After all, management teams are supposed to be good stewards of investors' equity -- and with interest rates scraping the bottom of the barrel near zero, it's all but impossible to earn a meaningful return on a big pile of cash.
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With corporate cash holdings sitting at a record high right now, that's a real problem indeed. Share buybacks historically only add value when those shares are cheap, and a dividend initiation can set a nasty precedent for management teams that don't want to openly admit that they can't figure out a better use of cash. So what's a flummoxed CEO to do? The big alternative is to go shopping -- for merger and acquisition candidates, that is.
In markets in which fundamentals are being discounted, mergers and acquisitions (better known as M&A) can provide amazing value for purchasing firms' balance sheets -- and they can provide instant gratification for shareholders in the target firm. Too often, investors think that there's no money to be made once a deal has been announced, but that's just plain wrong; between merger arbitrage opportunities and value creation for acquiring firms, it's worth paying attention to Wall Street's deal book.
With that, let's take a look at
five M&A deal stocks worth watching
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