The best performing stocks in the S&P 500 in August 2010 were on the receiving end of buyout offers or rumors of buyout offers during the month. This powered many stocks to double-digit percentage gains during a generally lousy month for equities.

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Tech and Sales
(NYSE:MFE) was the best performing stock in the S&P 500 in August 2010, and finished up 41%. The stock gained that title the old fashioned way as the company was the subject of a buyout offer from Intel (Nasdaq:INTC) in a cash deal valued at $7.68 billion. Apparently, Intel has found a better use for its cash than buying its own stock back like many of its peers.

Priceline (Nasdaq:PCLN) was up 28% during the month, as the company reported results for the second fiscal quarter, and resumed its historic pattern of beating earnings estimates. The company stumbled back in May when it reported first quarter earnings, but investors have forgiven the company and the stock has now retraced everything it lost over the summer.

Akamai Technologies (Nasdaq:AKAM) seems to have avoided the fate of many if its peers in the technology sector, and was up 24% in August. The company was named as a possible takeover target during the recent market sell off, with Google (Nasdaq:GOOG) being named as the potential buyer.

Agriculture and Healthcare
CF Industries Holdings
(NYSE:CF) finished August 12% higher, as the entire agricultural chemical group was lifted by the continuing takeover battle between Potash (NYSE:POT) and BHP Billiton (NYSE:BHP). Potash has turned down a $38 billion buyout offer from BHP Billiton.

DaVita (NYSE:DVA) was also up 12% during the month. The company is in the healthcare sector and provides dialysis services to patients with damaged kidneys. DaVita reported second fiscal quarter earnings that matched guidance on earnings, and also raised guidance on cash flow for the full year.

Bottom Line
Investors that own any of the names on the list of the best performing S&P 500 stocks are no doubt in a celebratory mood, but they might consider trimming back some of these positions and taking profits. Rumors of buyouts can vanish as quickly as they arrive, driving short-term investors out.

Investors bid up the prices of stocks in industries that have seen mergers and acquisition deals, making some investors happy that they stuck with stocks in August 2010. (For related reading, take a look at M&A Competition Is Cutthroat For Acquirers.)

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Tickers in this Article: MFE, PCLN, AKAM, DVA, CF, INTC, GOOG, BHP, POT

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