Good morning, it's Paul here.
Just so you know what today's timings are, I'm on the afternoon shift - so am writing between 11am- expected finish time c. 3:30pm. I've got nothing else on today, so no distractions thankfully. Well, just the market being open, which is a constant distraction of course.
Takeover activity
This is turning into something of a frenzy, with practically every day bringing news of another UK listed company receiving bid interest. I suspect there might be many more to come - because the weak pound makes UK assets attractive to overseas buyers. Takeovers provide us with lots of potential opportunities to make money, so I'm rather excited about this theme.
Also, some markets e.g. USA, look expensive right now, therefore in comparison UK shares look cheap. Therefore, buying in growth through relatively cheap takeovers of UK companies, looks a very sensible strategy for American companies. There's also the potential for a USA-UK trade deal post-Brexit, which could enhance the attractiveness of some UK companies to an American buyer. Language helps too.
Positioning ourselves in companies' shares which look well set up as a potential bid target can be lucrative if there's a decent bid premium. However, sometimes bids can be at a poor premium (e.g. recently Sanderson (LON:SND) only about 10%), or in financially distressed cases, at a discount - who can forget the Flybe bid at just 1p, when shares had been c.16p days beforehand?)
Although it's mostly luck, as nobody really knows which companies might receive bids. It's often very surprising which ones do! (Earthport & PTSG spring to mind). Sometimes bidders can see something good in a company which UK investors might think is not good. And/or, American buyers, particularly VC/PE seem happy to put gigantic, unfathomable, valuations on tech companies. That's fine by me, if they want to buy any of my holdings at greatly inflated prices.
Talking of potential takeover bids, Staffline (in which I hold a long position) has caught my eye this week, not for results, but as a possible takeover target. I wouldn't normally cover this kind of thing, but it looks a good opportunity in my view, and it will be interesting to hear what subscribers think, in the comments section below.
Staffline (LON:STAF)
Share price: 140p…
