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Watching options activity can point an investor to stock opportunities. So what does Michael McCarty of Meridian Equity Partners have to say?
"We've noticed a tendency now for foreign companies to buy U.S. companies," he told CNBC. "With the declining dollar and the declining market here, things are cheap...and the acquisitions we've seen have been preceded by options activity."
He found that to be the case with Barr Pharma
[BRL
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], DRS Technologies
[DRS
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], and Anheuser Busch [BUD
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].
So where does he see the most options action right now?
Recommendations:
"We're seeing an awful lot of activity in AK Steel
[AKS
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]," he said.
"It sounds like AK Steel has put themselves up for sale, and are seeking a buyer, and we wouldn't be surprised to see either a Chinese, Russian, or Indian company, who seem to be out there shopping in our markets, looking at AK Steel."
McCarty has also seen some telltale options action in the tech sector.
"We like EMC
[EMC
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]," he said. "The decline in the market has also created an opportunity for stock pickers to come in and look for value, and in the case of an activist investor, realize that value."
He finds EMC especially attractive because of its 85 percent stake in VMWare
[VMW
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].
"They've insisted they don't want to spin it off, but we've seen an awful lot of activity in that name this week," he explained.
Disclosures:
Disclosure information for Michael McCarty was not immediately available.
Data is a real-time snapshot *Data is delayed at least 15 minutes