29 Jan

Buyout tryouts

29 January 2012 |
Written by Skot Kortje, Stock Trends Analyst
font size
Print

Most of the buyout stocks that make it into Stock Trends portfolios are dead money - trades destined to go nowhere and a drag on long-term portfolio performance. But sometimes a buyout stock delivers.

Shares of RuggedCom Inc. (RCM-T) jumped today on news that the company's board has accepted a friendly buyout offer made by Siemens AG (SI-N). At $33 a share, Siemens' bid to acquire RuggedCom, a maker of IT equipment for the industrial sector, is $11 per share above the hostile bid previously made by Belden Inc. Siemen's offer extends a142% premium on the value of RuggedCom's stock before the Belden bid, which was then trading below $14.

Stock Trends subscribers will be interested in this development. RuggedCom is currently a holding of Stock Trends TSX Portfolio #1, bought at $25.80 in the aftermath of the Belden bid when the stock met the portfolio buy criteria on January 20. Shares of the company today closed at $32.85.

Of the 484 positions taken by the Stock Trends TSX Portfolio #1 since 1993, about 10 have been because an acquisition announcement caused the stock price to break out to the valuation level of the announced deal. Because the model portfolio is based on trend and price momentum, a few buyout stocks, like RuggedCom's, have met the trading strategy's buy criteria. Almost always these trades go nowhere, and generally are a drag on the portfolio's performance.

However, sometimes the intial buyout offer spurs other parties to make a competing offer. This, of course, is a desirable outcome for shareholders of the coveted company and can result in tidy, profitable trades - even for latecomers to the stock. But timing trades in merger and acquisition prospects is not the intent of the trend-following trading systems promoted by Stock Trends.

Although the trading strategies employed here are attempting to capture stocks that are breaking out into a new bullish trend, these buyout stocks would not pass for a proper trend trade since the end-game - the acquisition price - has already been established and disseminated in the market.

Nevertheless, the Stock Trends mechanical trading systems are strictly applied, regardless of the material news driving a move in the share price. There is no secondary evaluation of the stock's suitability. In a sense, the RuggedCom trade is a failure, as are all buyout stocks that trigger a buy signal. The trading strategy objective cannot be met - a new bullish trend will not be achieved.

That this particular trade results in a profit of significance, courtesy of a subsequent higher bid, is a bonus. A welcome bonus.

Published in Stock Trends

More in this category: « Improving signs for the stock market NYSE Bullish trend breadth turns positive »

Subscriber Testimonials

Thank you for your excellent work and kind approach to your customers.
Odette C., Subscriber
I am something of a momentum investor. I find Stock Trends useful as I can look at my portfolio as a “watch list” and quickly see where trends are declining in strength or reversing, so it is particularly useful as a tool in portfolio management regarding sales.
William C., Subscriber
I've followed your recommendations since reading your columns in the Globe & Mail, and finding they published Stock Trends arrows in their financial listings. I do find them a guide to the general market and what I should be avoiding for declining chart trends.
Has probably saved me the subscription by not rushing into hot stocks!
Anthony D., Subscriber
I am fascinated with your service and methodology - it is very impressive. [...] Over the years I have concluded that there are many ways to approach stock investing, but once one has chosen a path, one is better off sticking to it.
Bob E., Subscriber
I find your website and research very helpful in my stock trading. I have subscribed to several related services in the past and none present their work with “just the facts” as you. Please keep up the great work so that I can continue to learn!
Bryan E., Subscriber
I want to thank you for posting such an excellent guide to technical analysis on the web. You have provided a great service to all of us novice investors.
Michael C., Stock Trends user
Your report is an impressive, excellent tool and I have recommmended it to friends.
Colin E., Subscriber
I very much like the systematic approach to analyzing stock data, it fits my approach.
Subscriber
I use Stock Trends to help direct my stock picks. Also, following the advice of Stock Trends I have religiously used stop-loss orders and have avoided hanging on to losing stocks for emotional reasons.
John B., Subscriber
Stock Trends Weekly Reporter is an easy way to pick up equities that represent an upward trend.
Subscriber
There is a lot to be gained from comparing trends of how individual stocks are doing within a sector, as well as how the sector is performing relative to the broad market.
Dudley R., Subscriber
An admitted cynic, it's obviously very high praise when he says he likes StockTrends because of its "simplicity, utility, openness, [and] honesty," and in addition to having "no hidden agenda" is "understandably documented [and] historically verifiable." And, he adds, "It lets me see a lot of things without doing a lot of work." Globe and Mail
Paul W., Subscriber
You have created and maintained an amazing, highly educational program and I am grateful for your part in getting our retirement funds to the good place they are.
Karin M., Subscriber
Stock Trends analysis quantifies nicely the movement of individual stocks. I’ve found that if the technicals are out of synch with fundamental analysis, it is a wake-up call to make a decision. The Stock Trends Bull/Bear Ratio is useful in identifying major market bottoms and tops. It has always presented a good buying or selling opportunity.
Charles G., Subscriber
I am just writing to tell you of my appreciation of your service! It makes so much sense to me. You seem to be an oasis of stability and sensibility in a stockmarket jungle.
Adrian S., Subscriber
Hence, anyone who had followed the "Stock Trends" line should have sold their Bre-X shares and, with the windfall, paid for a lifetime subscription to The Globe and Mail and more. Talk about return on investment!
Muni P., Subscriber
Just thought I'd call to thank you, Skot. Stock Trends Weekly Reporter helped pay for my daughter's education!
Peter H., Subscriber
I have had the good fortune to be reasonably successful and enjoy the investment process. Your process would be recommended for both experts and those who are new to investing.
Frank I., Subscriber
I've followed a number of Stock Trends picks, and the methodology is solid.
Doug B., Subscriber
Stock Trends information is part of the base information I review before making a trade.
Subscriber

Subscription Plans

STWR - Monthly

$19.95

Monthly subscription plan to Stock Trends Weekly Reporter - pay your monthly subscription fees by having them automatically charged (PayPal only). Free 7-day trial period. Subscribers may cancel before the end of any subscription month.

STWR - 1 Year Prepaid Subscription

$199.00

1 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 16% off monthly rate!

STWR - 2 Year Prepaid Subscription

$299.00

2 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 37% off monthly rate!

STWR - 3 Year Prepaid Subscription

$399.00

3 Year Prepaid subscription to Stock Trends Weekly Reporter. Save 44% off monthly rate!

Stock Trends Editorial

Stock Trends Mid-Quarter Review: How the Year-End 2025 Themes Are Performing in Q1 2026
Halfway through Q1 2026, the question is no longer theoretical: Did the year-end institutional momentum and ST-IM Alpha themes actually guide investors effectively? With the updated February 13, 2026 Stock Trends dataset now in hand, we can measure the outcome directly — not against headlines, but against trend structure, relative strength, and momentum persistence. The short answer: the framework largely held — but leadership rotated exactly where the model suggested it might.

14 February 2026 Read more...
Stock Trends Year-End Analysis: Institutional Momentum, ST-IM Alpha, and the Road Into Q1 2026
As 2025 comes to a close, investors naturally ask whether the strongest trends visible at year-end represent durable opportunity—or merely seasonal noise. The Stock Trends framework addresses this question not by forecasting headlines, but by examining how trend structure, momentum and participation, and ST-IM forward opportunity align across different classes of capital. This year-end outlook integrates three complementary lenses that Stock Trends users can carry directly into Q1 2026: Large-cap institutional momentum — where capital can deploy at scale Top Trending momentum leadership — where price discovery is happening fastest Stock Trends Inference Model (ST-IM) — where forward return expectations and risk dispersion suggest true alpha opportunity

29 December 2025 Read more...
From Silver’s Breakout to a Broader Metals Regime
The final trading week of the year is often dismissed as inconsequential. Liquidity thins, participation narrows, and many investors assume that meaningful signals will wait until January. Yet history shows that year-end positioning—especially in hard assets—often reveals more about institutional conviction than about seasonal noise. The Stock Trends framework does not speculate on holiday effects. It classifies what is happening beneath the surface. As holiday trading unfolds, the precious metals complex offers a clear case study in why disciplined trend analysis matters most when markets appear quiet. Earlier this month, we examined silver’s resurgence and the discipline required to participate without emotion. Today’s update allows us to ask a more important question: Has silver leadership expanded into a broader precious-metals regime, or is this still a narrow trade vulnerable to reversal?

26 December 2025 Read more...
The Quiet Power of Hospital Consumables: Durable Trends Hidden in Plain Sight
In markets where headline indexes appear steady but leadership narrows beneath the surface, the Stock Trends framework tends to guide investors toward a specific class of opportunity: durable trends supported by durable business structure. This week’s universe reinforces that late-cycle character—Bullish classifications remain dominant overall, yet momentum leadership is increasingly selective. It is in this environment that a largely ignored cohort deserves fresh attention: hospital consumables. These are the unglamorous, repeat-use products embedded deep within clinical workflows—dialysis supplies, catheters, blood collection systems, sterilization kits, and procedure disposables. They rarely make headlines, but they often exhibit the same technical signature Stock Trends users learn to respect: persistent trend behavior with corrections that are more often time-based than destructive.

20 December 2025 Read more...