Carl Icahn victorious in battle for Pep Boys:
Month: December 2015
The Battle Continues…
Icahn ups the ante in battle for Pep Boys:
The Week That Was
With the exception of Japan, investors enjoyed a Santa rally this week as six of the seven indices I track posted strong gains comfortably in excess of 1.5%. London’s FTSE 100 was the week’s top performer followed by Germany’s DAX and France’s CAC 40.
Nice…Church & Dwight joining S&P 500 Index
Shares of Church & Dwight (CHD) jumped 1.4% yesterday on news that it was going to be joining the prestigious S&P 500 Index after Intel’s acquisition of chip maker Altera Corp. closes, which is expected to be after the close of trading on December 28th. The celebratory mood continued today with CHD jumping a further 1.7%!
This inclusion should see higher demand for the Company’s shares in the near term as managers of index products, and both retail and other institutional investors react to the announcement.
The Management and staff of CHD must be commended on such a great achievement…I believe this is just one of many more good things to come from the Company.
The Week That Was
Investors digested the Fed’s decision to raise rates by dipping back into the market and allowing several indices to recover some ground lost last week. Four of the seven indices shown above are posting negative returns on a YTD basis, with Japan’s Nikkei 225 occupying 2015’s top spot thus far with a strong gain of about 8.4%. The rout in commodities has not been kind to Canada’s S&P/TSX composite, handing it the dubious distinction of being this year’s worst performer to date (-10.92%).
Wasn’t Expecting This: CIBC offloads American Century stake
Canada’s CIBC today announced it was selling its stake in wealth manager American Century Investments to Japan’s Nomura Holdings for about USD$1B after acquiring the 41% stake for about USD$848M from financial behemoth JPMorgan Chase in 2011. The bank indicated the reason for the sale was the unlikelihood of it acquiring majority control of the wealth manager…I guess Nomura is content with a minority stake or believes the status quo could possibly change. CIBC is expecting a gain of about USD$170M net of taxes from the sale.
Thankfully, the sale does not appear to signal a shift in strategy away from expanding the Bank’s private banking and wealth management presence, but does mean there will be some drag on earnings going forward until cash from this disposal is deployed (redeployment may take a while since demand for wealth management businesses had led to increased prices).
Make Room Manny, Moe and Jack?
Billionaire investor Carl Icahn today raised his offer to acquire automotive parts and services chain Pep Boys (NYSE: PBY) to $16.50 per share in cash, trumping a rival offer of $15.50/share by Japanese tire giant Bridgestone.
Both Icahn and Bridgestone have very deep pockets and while its left to be seen how this battle plays out (Bridgestone has until December 23rd to propose a higher offer), those investors who bought into Pep Boys towards the end of last year as part of a long-term plan or short-term trading strategy are looking at a sweet gain of more than 60% should Icahn’s deal go through.
The long-term attractiveness of the automotive parts and services business together with potential synergies from each bidder’s respective existing businesses business undoubtedly led them to knock on Manny, Moe and Jack’s door, and while I did not make a call to go long Pep Boys, this whole scenario makes me feel more confident on the prospects of Genuine Parts Company (NYSE: GPC) as an attractive long-term investment.
The Week That Was
Investors fled stocks last week as each of the indices we track fell sharply. London’s FTSE 100 was last week’s worst performer with a decline of nearly 4.6% followed by the Canadian S&P/TSX composite which plunged nearly 4.3%. Falling crude prices and the increasing likelihood of a Fed rate hike were the likely reason for the market carnage.
The Caribbean: Sun, Sand, Stocks!
While visitors know the Caribbean for its pristine beaches, great natural beauty and warm hospitality, those fortunate to live in the islands know that the region can offer attractive returns for locally-based investors and in some instances those domiciled farther afield. Continue reading
The Security Whisperer 