5 Takeover/LBO Targets Being Bought Up By 

Hedge Funds And Insiders

February 23, 2012  |  includes: AEO, CLWR, CRUS, EXXI, SGEN

Analysts closely follow companies that they believe could be attractive takeover targets. The reason why is when a company announces that it is being taken over, its stock price usually jumps to reflect the takeover premium being paid for the company - a very profitable event for shareholders.

We compiled a list of potential takeover/leveraged buyout (LBO) targets from various sources including Minyanville and CNN Money for those seeing net buying interest from institutional investors (such as hedge fund managers and mutual fund managers) and company insiders, indicating these groups of "smart money investors" expect these stocks to outperform.

‪Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬

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Do you think these companies are attractive targets for a takeover? Use this list as a starting point for your own analysis.

1. American Eagle Outfitters, Inc. (AEO): Operates as an apparel and accessories retailer in the United States and Canada. Takeover/LBO rumor sourced from Seeking Alpha. Net institutional purchases in the current quarter at 6.0M shares, which represents about 3.6% of the company's float of 166.68M shares. Over the last six months, insiders were net buyers of 1,134,490 shares, which represents about 0.68% of the company's 166.68M share float.

2. Clearwire Corporation (CLWR): Provides wireless broadband services. Takeover/LBO rumor sourced from Business Insider. Net institutional purchases in the current quarter at 114.7M shares, which represents about 34.43% of the company's float of 333.14M shares. Over the last six months, insiders were net buyers of 2,798,989 shares, which represents about 0.84% of the company's 333.14M share float.

3. Cirrus Logic Inc. (CRUS): Develops high-precision analog and mixed-signal integrated circuits. Takeover/LBO rumor sourced from Seeking Alpha. Net institutional purchases in the current quarter at 2.5M shares, which represents about 3.93% of the company's float of 63.54M shares. Over the last six months, insiders were net buyers of 152,115 shares, which represents about 0.24% of the company's 63.54M share float.

4. Energy XXI (Bermuda) Limited (EXXI): Engages in the acquisition, exploration, development, and operation of oil and natural gas properties onshore in Louisiana and Texas and offshore in the Gulf of Mexico. Takeover/LBO rumor sourced from Seeking Alpha. Net institutional purchases in the current quarter at 5.3M shares, which represents about 8.44% of the company's float of 62.83M shares. Over the last six months, insiders were net buyers of 56,448 shares, which represents about 0.09% of the company's 62.83M share float.

5. Seattle Genetics Inc. (SGEN): Focuses on the development and commercialization of monoclonal antibody-based therapies for the treatment of cancer and autoimmune diseases in the United States. Takeover/LBO rumor sourced from Minyanville. Net institutional purchases in the current quarter at 10.4M shares, which represents about 9.17% of the company's float of 113.45M shares. Over the last six months, insiders were net buyers of 1,147,052 shares, which represents about 1.01% of the company's 113.45M share float.

*Insider data sourced from Yahoo Finance, institutional data sourced from Fidelity, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.