Jim Cramer speculates on acquisitions and leveraged buyouts all the time, but have his predictions really made you any money? In honor of yesterday's Mad Money show and Alcoa's (AA) bid for Alcan (AL), I decided to run a screen on all the companies Jim Cramer has speculated might be possible acquisition targets to see how well his predictions have faired. A few quick laps through the database and the results are in: since October 2005, when this performance tracking started, Jim made 213 prominent buyout predictions on 155 different stocks.
Jim correctly predicted the acquisition of The Topps Company (TOPP) when he featured it in April 2006, almost a full year before the Eisner Group's March announcement. More notable were his comments on FileNet (FILE), two months before it got a bid from IBM last July, or his mid-April prediction that International Securities Exchange (ISE) would be a takeover target. In fact, the announcement of the bid for ISE by Deutsche Boerse was made only 11 days after Jim Cramer made this call in the April 12th Lightning Round. For the purposes of this study, we'll also include the predictions of Lucent's merger with Alcatel, forming ALU, as well as Sirius Satellite's (SIRI) planned merger with XM Satellite Radio (XMSR).
This brings us to a grand total of five correct predictions. While a buyback screen may give odds of 4 to 14 or 28.5% as Cramer professed on last night's Mad Money, the complete Jim Cramer prediction gives a winning percentage of only 3.2%. To be fair, Jim gets extra props for predicting more consolidation in the steel industry, as Alcoa's (AA) bid shows, but in a mixed up kind of way. Alcoa (AA) was actually one of the top 5 companies mentioned as possible buyout candidates, and with Alcoa trying to pick up Alcan, its unlikely that Alcoa will remain a potential takeover target. If you think this methodology can work for you, I've included the top 12 acquisition candidates with at least three lifetime mentions of takeover target status.