Instead of worrying about change, I always try to make a buck off it.
Or a pound sterling, to be precise.
Britain is currently one of the juiciest opportunities to bag quick profits from takeover bids. If you are interested in European takeover targets, Britain is the place to look at.
Four weeks ago, I pointed out the company that owns the largest part of the famous "Covent Garden" neighbourhood in London. It's a property company that owns billions worth of prime real estate, such as the famous Covent Garden Market Hall.
Members of my website got access to a 24-page "Brexit Bargain" report titled "Are sovereign wealth funds keen to bid?"
A mere 27 days later, it emerged that Saudi Arabia's sovereign wealth fund was considering a bid for the company. The Saudis have teamed up with Nick Candy, one of the best-known and wealthiest British property entrepreneurs. The Sunday Times landed a scoop by reporting about these preparations, and a day later, an official disclosure notice was filed with the company and the stock exchange. The disclosure notice informed shareholders that a bid was possible, but not yet guaranteed. The Saudi/Candy team now has four weeks to get its act together, or officially call off the bid approach. In any case, such a notice isn't filed if there wasn't already a serious intent to try and make the bid happen.
By the time all this appeared in the news, the stock was already 21% higher. There could be more to come. If discussions do lead to a formal bid, I expect my readers to walk away with a profit of possibly up to 50%. Given that this company was one of the more obvious and conservative bid targets on the London Stock Exchange, this would be an unusually high gain from a bid situation. However, British small- and mid-cap stocks had been battered so hard over the past three years, that this kind of generous upside is not all that unusual right now.
Indeed, during the past few months, Brexit Britain has become one of Europe's hottest takeover destinations. Its leading economic indicators are looking better than those of large parts of the Eurozone, its capital market is wide open to international capital, and prices are more attractive than at any point during the past decade.
No wonder the Saudis got their cheque book out. The sheiks already own vast amounts of prime property in London and have long found the British capital one of the best places to safely stash away some of their wealth. The transaction would make all-round sense, and I have high hopes that it'll come off.
There's much more happening in Britain right now. Other corporate action since I covered this subject a month ago includes:
- A takeover bid for Elegant Hotels (AIM:EHG), which gave shareholders an overnight gain of 57%.
- A hostile bidder throwing GBP 5bn in cash into the ring to gatecrash a merger that Just Eat (LSE:JE) intended to carry out with a foreign competitor. A bidding war for the company is now likely, which one substantial Just Eat shareholder expects would yield a 47% profit compared to the prices paid before this corporate saga started.
- A USD 3.8bn bid for Sophos (LSE:SOPH), one of the UK's largest software companies, from an American private equity company. Shareholders made 37% overnight.
I had listed further such transactions in my Weekly Dispatch of 23 August 2019. The list of bids for British companies keeps getting longer by the week. Many of these transactions are sizeable in absolute terms.
Brexit holding up investments? Not for these strategic investors. Quite the opposite is the case. They all wanted to make these acquisitions before the chaos in Westminster subsides. They know that prices are low right now and that an eventual resolving of the Brexit question is likely to lead to higher stock prices. Some of these bidders are viewing the post-Brexit UK as a European safe haven for investments, far away from the risky financial experiments and political empire-building on the other side of the Channel.
The opportunity to latch on to the takeover mania that is gripping Brexit Britain isn't over yet. There is still time for you to join in.
If you asked me about my single best bet for the next lucrative takeover offer in Brexit Britain, I'd still point you towards a British company that I featured in a 53-page research report back in August 2019. Based on my calculations, the stock in question has a 75% upside if or when a bid is made, and the entire investment case has only gotten stronger. E.g., the company's new CFO recently made an insider purchase of stock worth a staggering GBP 4.8m (equivalent to 1.3% of the company's outstanding stock). That was one hell of a vote of confidence for his employer's stock. Up to now, the share price hasn't moved yet, so you can still buy into this company at the same price it was trading at when I first wrote about it. It is just 3% higher than what the CFO paid for his stake.
The Brexit opportunity isn't going to last forever. By the time the wider public latches on to it, the ship will probably have sailed, which is why I wanted to point it out to you one last time.
Just as the fruits are starting to ripen in the UK, I am already preparing for the next contrarian bets elsewhere. As always, I want to get in early and at the lowest possible price. One such opportunity – a similarly unpopular investment – will be featured in an extensive research report that I'm publishing next week. It forms part of my ten best investment ideas of the year, and it'll be exclusively available for my Members (i.e. those readers who invest USD 49 per year to be truly ahead of the crowd).
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