BJ

My pick for Q1 2011 is BJ's Wholesale Club. If you have been living under a rock the past quarter and are unaware, BJ's is prime for a takeover/buyout and private equity companies are chomping at the bit waiting for them to make a deal work. The stock has seen an increase from speculation, however I do not think it's seen anywhere near enough of a valuation from the speculation so far. I think there is significant short-term value to gain from the purchase of this security, especially on news yesterday that BJ's was closing 5 stores in the southern US as well as rearranging senior management. The 5 stores they are closing are historic underperformers and as their CEO mentioned they did not believe those stores had the potential to turn around sales. These moves point to one thing for me - they have a buyer ready to execute a deal as long as they can make smart moves to satisfy a potential suitor.

I motion we immediately buy into BJ's and hold it waiting for a buyout bid to be made within the next 60 days. Even BJ's spokespeople have said that they were waiting till after the holidays to annouce any potential deal.

This one seems to be a no-brainer. Even if all deals fall through, we're looking at a profitable company with strong balance sheets and strong management - so if no deal happens, it's a win-win.