This weekend, Donald Trump’s presidential campaign put out a 312-word press release.
In it, Trump economic advisor Peter Navarro says that major media organizations are becoming Standard Oil-style “trusts.” Further, Navarro says that Trump would “break up the new media conglomerate oligopolies that have gained enormous control over our information, intrude into our personal lives, and in this election, are attempting to unduly influence America’s political process.”
“AT&T, the original and abusive ‘Ma Bell’ telephone monopoly, is now trying to buy Time Warner,” Navarro wrote. “Donald Trump would never approve such a deal because it concentrates too much power in the hands of the too and powerful few.”
It’s a somewhat surprising anti-business stance, as it puts Trump in company with the likes of U.S. Sen. Bernie Sanders.
But that’s where we find ourselves this year…
Whether you’re in favor of this deal or not, I know you’re looking at it as a possible profit opportunity. You’re a tech investor – that’s how you think.
I want you to stop right there.
M&A deals like the proposed AT&T-Time Warner merger can help these companies beat their competition — and boost their share prices.
That’s obviously good news for investors – if they’re already “in.” However, you’re likely not “in” this one.
But I have a “workaround” around this problem. It will help you boost your earnings via tech-sector M&A… and you won’t have to get “in” early.
Content + Platforms = a 19% Jump
Pending regulatory approval, the AT&T-Time Warner merger would be one of the largest media mergers of all time. But it’s also a marriage between two very different companies…
- Time Warner creates content: HBO, Warner Bros. film studios, CNN, TBS, and TNT. It also owns DC Entertainment (home to Batman and Superman) and has a 10% stake in the Hulu streaming subscription service.
- AT&T, besides still handling local and long-distance phone service for millions of landline customers, provides platforms (wireless, phone, cable) on which consumers can access such content.
It’s a move that makes sense, especially in the world of streaming video, the preferred content platform by mobile users nationwide: a content company pairing with a mobile distribution network.
Despite concerns about the deal from lawmakers and consumer advocates, investors liked the deal – sending Time Warner shares up 19% following the merger’s announcement.
That would have been nice…
But it’s extremely difficult to predict such deals and time your “Buys” to take advantage of them.
Who knows what company is going to buy what when? Not I – not all the time… and I spend my days studying this stuff.
But there is a way to get in on such M&A deals – the next time one comes around – without any guesswork at all…
Something shocking occurred on Aug. 1, 2016, that signaled the beginning of a new era in technology – one that will create more millionaires this decade than any time in history. And Michael A. Robinson wants you to be one of them. He has been researching this paradigm-shifting development for months – and now he’s “going public” with his research. So get ready. This free exclusive Strategic Tech Investor report will be landing in your inbox Friday, Oct. 28. For a preview, check out the video.
A Backdoor to M&A Action
Around the world, bankers have been keeping busy helping firms tie the knot. Thus far in 2016, we’ve seen well over $2 trillion worth of deal announcements, with more than 40% of that action taking place here in the United States.
And as is the case in most years, the tech sector leads the way.
According to Dealogic, global technology acquisitions thus far in 2016 have surpassed $400 billion, up 27% from the same period last year. We’re within striking distance of the all-time record set last year.
Simply put, this M&A tech frenzy won’t go away any time soon. It’s been a key theme for investors going back since 2000, and it will remain a key theme in coming decades as long as young, innovative firms pioneer new technologies that the big firms must control.
That’s why I think tech investors ought to own the Technology Select SPDR ETF (NYSE: XLK). Now, XLK is not focused on M&A.
Instead, it covers the entire tech sector – and so this exchange-traded fund (ETF) benefits from both buyouts and all the other lucrative tech trends out there.
XLK wisely avoids focusing on just one area of tech. The portfolio has stakes in the top firms in the S&P 500 in areas like hardware, storage, telecom equipment and services, cloud computing, semiconductors, mobile software, and internet software and services.
In this $13.21 billion fund, you’ll find AT&T. As XLK’s sixth-largest holding, it makes up 5.17% of the fund.
In it, you’ll also find many of the firms involved in 2016’s biggest tech deals: Microsoft Corp. (Nasdaq: MSFT), Oracle Corp. (NYSE: ORCL), Analog Devices Inc. (Nasdaq: ADI), and Linear Technology Corp. (Nasdaq: LLTC) are all there. And so are many other leading tech firms, including its largest holding, Apple Inc. (Nasdaq: AAPL) (14.1% of the fund), and Intel Corp. (Nasdaq: INTC) (with a weighting of 3.7%).
A Deep Bench
While this fund gives us broad and deep exposure to key tech niches, so do many of the firms in the fund themselves. They’ve built solid growth platforms from scratch, aided by steady slate of acquisitions.
Take a look…
- Cisco Systems Inc. (Nasdaq: CSCO) has parlayed its first-mover advantage in the network equipment segment into many more fields. And it’s done so with an exhaustive list of acquisitions. Cisco prefers to focus on smaller, private tech firms, continually looking to build an edge in hot new growth categories. For example, just in 2016 so far, Cisco has made three cloud-centric buyouts with CliQr Technologies, Synata, and CloudLock.
- Broadcom Ltd. (Nasdaq: AVGO) has used M&A to build one of the broadest set of computer chips that underpin the current explosion in wireless data communications. Broadcom avoids small “tuck-in” acquisitions and looks for targets that can add at least $1.5 billion in sales. The firm is even open to $10 billion deals – if they meet the criteria. Each deal must provide access to a new segment of the $335 billion global chip market
- Western Digital Corp. (NYSE: WDC) could have stood idly by as its core hard-disc memory market slowly gave way to more advanced flash-based drives. Instead, Western Digital used its massive levels of profits to acquire flash memory leader SanDisk Corp. in early 2016 for $16 billion. That move boosted Western Digital’s sales base from $13 billion to more than $17 billion. With more than $8 billion in cash in the bank, this firm has plenty of money to invest in its growth or to find other great buyouts.
- Cognizant Technology Solutions Corp. (Nasdaq: CTSH) is a master of this craft. While the IT services leader has steadily added market share with its own strong offerings, it has also used M&A to boost sales. We’re talking a sevenfold increase from $2 billion back in 2007 to today’s sales of nearly $14 billion. The firm prefers to make smaller moves that largely fly under the radar and bulk up from there.
As you can see, M&A is great news for buyers, sellers – and investors. It’s a clear path to growth for many firms, especially those that do it right.
And XLK is a great way to play this trend. At the same time, you also profit from the fast growth and high profit margins the tech industry always provides.
Trading at just $48, this is a well-run ETF. It has a cost ratio of just 0.15% and a four-star rating from Morningstar – meaning it meets all three tests in our ETF Profit Screen.
Plus, you get a solid track record with this broad-based ETF. Over the past two years, XLK has gained 26.9%. Over the same period, the S&P 500 is up just 12.5%.
In other words, XLK will give your portfolio much more than just a solid base.
It will benefit from both the tech sector’s organic and M&A growth for years to come – and offer a stable, cost-effective vehicle that’s tough to beat.
Triple-Digit Tech Profits… Heading Your Way
Finally, one last reminder…
I’m putting the finishing touches on my free exclusive Triple-Digit Tech Profits in the Singularity Era special report.
It’s going to show you how a life-changing epoch that got its start Aug. 1 is going to help you accumulate more wealth than you ever dreamed possible.
I’m going to send to your inbox this Friday – Oct. 28. So, please keep your eyes open and download it immediately.
I’ll see you then.
- Strategic Tech Investor: When It Comes to ETFs, Keep Your Eye on These Three Metrics.