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7 Hedge Fund-Owned Retail Stocks Primed for Takeout or Turnaround

NEW YORK (TheStreet) -- Earlier this week, I wrote a piece on the record level mergers and acquisitions activity we're seeing in the biotech space this year. That activity creates tremendous opportunities to participate in beaten-down stocks that can be bought for huge premiums.

And there is another beaten-down sector where M&A activity is heating up. It's retail.

This week, two activist hedge funds with a stake in Ann Taylor (ANN) argued the company should be sold. They stated the stock should be worth $50 to $55 on a buyout. That would be a 20% to 30% premium to where the shares trade today.

Last month, Sycamore Partners, the billion dollar private equity-hedge fund firm, said they initiated a nearly 10% stake in Express (EXPR) . They wrote a letter to the company indicating that they had interest in acquiring the entire company. Public-to-private takeouts typically come with a nice 20% to 40% premium in share values to get shareholders on board.

And then there's Chico's (FAS) , another retail apparel company. They said they were exploring a sale of their company, potentially teaming up with a private equity firm to take their company private. This news sent the stock up almost 10% in one day.

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