Market Overview

Here's A Diversified Way To Play Tech's M&A Hot Streak

Here's A Diversified Way To Play Tech's M&A Hot Streak
  • Motif Investing constantly looks for “trends, ideas and world events that could create an investment opportunity.”
  • They then pick 10 to 30 related stocks to build portfolios around, weighing them based on their exposure to the coinciding idea, event or trend.
  • One of the two highest-returns portfolios this month was the Tech Takeout Targets motif, which rose roughly 9.6 percent over the past month.

“It's a Catch-22 for many of the biggest names in technology – there they sit on top of their respective industries, with cash in the vault, and yet the next disruptive or emerging product or service could be the brainchild of a company that nobody's heard of,” Motif explains.

Related Link: This Chinese Internet Portfolio Surged 6X More Than The S&P 500 Over The Past Month

To drive growth, tech giants are often inclined to using one of their best weapons: cash – a buyout. An economic recovery has fueled this acquisition spree.

According to 451 Research, global tech M&A activity rose to $177 billion in 2012, up 23 percent from its multi-year low of 2009. “Within that flurry has been a focus on a few key industries: cloud-based software, business intelligence and analytics, and cyber-security,” the research site added.

Stocks in the Tech Takeout Targets motif “provide an opportunity to invest in companies connected to some of tech's most-talked-about buzzwords – with a potential additional bonus if these targeted companies are snapped up for attractive premiums.”

Check out the Tech Takeout Targets portfolio from five months ago here.

Performance And Allocation

The Tech Takeout Targets motif was the one of the best performing in the last month, having returned 9.6 percent versus the S&P 500’s 1.2 percent rise. Over the past year, the portfolio returned approximately 13.3 percent, versus the S&P’s 1.3 percent surge.

In terms of allocation, 43.1 percent of the portfolio's assets are placed in software-as-a-service (SaaS) stocks, 37.0 percent in business intelligence and analytics companies, and 19.8 percent in the cyber security industry.

As for individual stocks, the top companies in this portfolio in terms of allocation are:

  • 9.9 percent    CommVault Systems, Inc. (NASDAQ: CVLT)
  • 9.4 percent    Luxoft Holding Inc (NYSE: LXFT)
  • 9.0 percent    Qualys Inc (NASDAQ: QLYS)
  • 8.6 percent    Callidus Software Inc. (NASDAQ: CALD)
  • 6.4 percent    MicroStrategy Incorporated (NASDAQ: MSTR)
  • 6.0 percent    LogMeIn Inc (NASDAQ: LOGM)
  • 5.8 percent    PROS Holdings, Inc. (NYSE: PRO)
  • 5.3 percent    SPS Commerce, Inc. (NASDAQ: SPSC)
  • 5.3 percent    AVG Technologies NV (NYSE: AVG)
  • 5.2 percent    Bottomline Technologies (NASDAQ: EPAY)

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Posted-In: Motif InvestingLong Ideas M&A Tech Trading Ideas Best of Benzinga


Related Articles (CALD + AVG)

View Comments and Join the Discussion!

From Banking To Uber? Wall Street Continues Path To Silicon Valley

Oil Stocks Are Selling Off After This OPEC Commentary