Is takeover activity reviving?
Simon Ward
Post a Comment
I am a fan of Trim Tabs, a California-based research firm that compiles and analyses data on equity market flows. Trim Tabs have remained bullish on US stocks partly because of a big pick-up in share buy-backs during the recent correction. This resulted in equity market “float” – the number of shares outstanding – continuing to contract despite a slump in cash takeovers; with supply falling, stock prices were supported. Strong buy-backs also suggested corporate insiders were sanguine about profits and saw value in their shares.
Buy-back announcements often accompany earnings releases so the trend over the forthcoming reporting season should be monitored closely. However, Trim Tabs are now pointing to another potentially bullish development – a revival in cash takeover bids. The aggregate value of new cash deals surged to $11.8 billion last week – the highest since July. Normalising credit markets could help to sustain this pick-up, providing fuel for the next leg up in stocks.
View Printer Friendly Version
Email Article to Friend
Reader Comments