Investor Ken Fisher sees hot 2007 takeover market

By Dane Hamilton

NEW YORK (Reuters) - For Ken Fisher, the key to making money in the markets this year will be to think like a buyout pro.

Which companies are takeover candidates? Fisher, founder and chief executive of Fisher Investments, has some ideas, including Halliburton Corp. (HAL.N: Quote, Profile, Research, Stock Buzz) and Steel Dynamics (STLD.O: Quote, Profile, Research, Stock Buzz). But he says there could be many others in the current super-heated mergers and acquisitions environment. About a third of his $37 billion fund management firm, he says, is now invested in takeover candidates.

"I'm on the extreme side of bullishness right now," said Fisher in an interview this week. "We could have anything from a 10 percent (up) year to as much as a 40 percent year."

Fisher, a high-profile investment manager, author and commentator, sweeps aside concerns like high price-earnings ratios, volatile oil prices, government deficits and interest rate jitters that worry many investors in today's markets.

Instead Fisher believes more fundamental factors are driving the markets. Since 2003, it has been cheaper for companies to borrow money and buy equity than it ever has been before, across all global markets, he says.

In his latest best-selling book, "The Only Three Questions That Count," Fisher argues that low global interest rates that drive the current M&A market are being sustained by a substantial undercounting of the U.S. consumer savings rate, which drives global liquidity.

"People see Americans as profligate, but Americans actually save a lot. But savings rate data does not show that," says the 56-year-old investor, whose Woodside, California, firm advises a mix of high net worth and institutional

clients.