Tuesday, June 1, 2010

M&A activity = Opportunity

Orica's demerger
price: 25.31
thoughts: in a technical downtrend, but fundamentally this one looks good - a short term entry price might be 24.80

FGL's demerger
price: 5.51
thoughts: a much slower developing plot here - it's unlikely that there will be any significant announcements in the next month - although the valuations are probably easily close to 6 - although the timing of the returns is the key situation. Looking to pick up my first batch at 5.44

Healthscope's takeover
price: 5.58
thoughts: 2 other bidders have stepped up - and the sector strength today is a good combination. This looks like a sweet merger play with possible bidding creating good value - the price is the issue here - we'll stay close to the action.

question: what does this mean for the sector as a whole? - Does this signify value in the healthcare hospital sector?

Private hospital operator Healthscope yesterday confirmed that it had received two further takeover bidsover the weekend, rivalling the May 20 bid from a consortium made up of private equity groups Texas Pacific Group, Carlyle Group and Blackstone. Healthscope said the two new offers are priced at $5.80 a share, outbidding the earlier offer of $5.75 a share. Healthscope said that all three bidders will be permitted to conduct due diligence on the company’s financial records. © Media Monitors 2010

Gunns takeover rumours
price: 46c
thoughts: volume does dictate very heavy institutional activity - whether it be longer term buyers or actual takeover attempts, we should find out within a few weeks.

NAB and AXA continuing talks
AXA: price
thoughts: the deadline has been extended 3 weeks, great for a short term long punt on AXA - u can short nab/long axa if you want to play the arb. The time pressure here is the key to the probability of making something happen.

Some weaker economic reports coming in for Australia
(IGM)[AUST DATA PREVIEW] Building approvals slumped by a hefty 14.8% over April, nearly all but reversing a revised higher 16.8% gain...

[AUST DATA PREVIEW] Building approvals slumped by a hefty 14.8% over April, nearly all but reversing a revised higher 16.8% gain in March (prelim 15.3%). Trend growth was flat; however it marked its 3rd loss this yr and came in much worse than forecasts on a 5.5% decline. The details were also very soft with owner occupied housing slumping by 13.5% after a 1.3% rise prior, and the volatile private unit segment down a mere 5.9% after a 58.3% gain prior. Meanwhile, the value of total building approved fell by 13.3% in April. Following a strong upswing in 2009; sharply higher mortgage rates on the back of RBA's consecutive rate hikes and the Govts scaling back of its FHB bonus has resulted in approvals losing their altitude. The data will be a sign of caution for the CB; and after 3 consecutive rate hikes in 2010, well supports a pause in tdys meeting.

Today's trade :

Added some WPL shorts 100@43.01

Oil is running out of steam and the market seems to be softening. Basically just adding some beta to my portfolio - towards the short side, as I start to add in some longs for the above MA opportunities.