Will we see more takeovers? #finance
It was another dire week on the stock market and the FTSE 100 moved closer to 6000. The drop from the high of over 7000 a few months ago is substantial. Will we see more takeover bids? We have already seen a bid for RSA insurance that fell through, Thorntons was taken over by Ferrero, Cable and Wireless look like being taken over and TSB went too.
Many companies now look like takeover targets. Even small AIM listed companies could be snapped up on the cheap by the big boys. Verona Pharma has a promising future and they’re down for no apparent reason. In fact, the whole AIM market has suffered this week. Investors seem averse to the high risks in the AIM market.
Even Britain’s biggest supermarket chain, Tesco doesn’t look safe from takeover at the moment. Something has to give in the supermarket price war and I thought it would be Morrison’s that was the loser or would be taken over, but they seem to have fewer problems than Tesco. At just over 150, Tesco now looks incredibly cheap.
I think it was Warren Buffett who said invest in the companies that you like and use. I though the AA had a lot of room for growth and they offer a good service, but their share price has declined the same as all the others. They’re new to the market, so it’s harder to assess their financial strength. I think it’s going to take a while before the market picks up. The AA will be a good long-term investment even though it looks a bit rocky now.
There is still time for a Santa rally, but the feel good factor is missing. Investors are very cautious and averse to high risk. I think even oil stocks could be good in the long term, but some observers claim that oil could half in price again in the next few months with prices going as low as $20 a barrel.
What should investors do? I’ll hold and sit it out! That’s all for this week. You can follow this blog by entering your email address in the space at the top of the sidebar or you can simply follow me on Twitter for updates.