Tuesday, November 16, 2004
Takeover talk starts Chaucer surge
Directors at Cox Insurance announced last week their company has received approaches from parties interested in buying out shareholders, proclaiming that discussions
may or may not lead to an offer for the company at a material premium to the recently traded share price
The stock market loves takeover situations and this announcement saw buyers come bursting out like hunting hounds, scrambling over the top of each other in pursuit of a profit. Prior to the announcement Cox shares bobbed along unnoticed at 61p to sell but responded quickly, coming up faster than a scuba diver in a pond of piranhas, closing today at 85p to sell.
The feeding frenzy focused attention on the insurers, where bargains have existed in abundance for some time. Chaucer Holdings, my stake in the sector, received some long overdue affection and today closed at 47p to sell, well above it's low of 40p, touched briefly in the storm of selling that followed the Atlantic hurricane season.
47p is a significant level for Chaucer, it is the same price the shares traded at the start of 2004. Despite my ill-disciplined second purchase of Chaucer shares at 54.75p in April, the advance is encouraging, the shares have held their ground in 2004 and further progress from this point will pile on the profit.
The Cox announcement underlines how cheap the insurers remain and spawns the suggestion takeovers could be on their way elsewhere too. Chaucer is still demonstrably cheap at 47p, its share price backed by tangible assets amounting to 41.9p per share and the flow of future earnings from a very profitable company.
The Cox kerfuffle raises a point hinted at in a recent blog - an investor should monitor the news and trading statements from companies in the same peer group as his investment and those that suffer comparable business risks.
That's no no mean feat. But not only will this level of investigation assist in the regular process of appraising and measuring the value of your holdings, it may also help identify outstanding investment opportunities that turn up like truffles.
Truffles however, have to be sniffed out. By the time the hunting hounds can smell a quick turn, much of the advance will have passed, probably taken by market makers before the stock exchange even opens.
Unfortunately for me, I have no cash to invest further in the bargains currently present in the insurance sector. That said, keen profit-seekers might like to turn their noses in the direction of SVB.
The Artful Dodger
may or may not lead to an offer for the company at a material premium to the recently traded share price
The stock market loves takeover situations and this announcement saw buyers come bursting out like hunting hounds, scrambling over the top of each other in pursuit of a profit. Prior to the announcement Cox shares bobbed along unnoticed at 61p to sell but responded quickly, coming up faster than a scuba diver in a pond of piranhas, closing today at 85p to sell.
The feeding frenzy focused attention on the insurers, where bargains have existed in abundance for some time. Chaucer Holdings, my stake in the sector, received some long overdue affection and today closed at 47p to sell, well above it's low of 40p, touched briefly in the storm of selling that followed the Atlantic hurricane season.
47p is a significant level for Chaucer, it is the same price the shares traded at the start of 2004. Despite my ill-disciplined second purchase of Chaucer shares at 54.75p in April, the advance is encouraging, the shares have held their ground in 2004 and further progress from this point will pile on the profit.
The Cox announcement underlines how cheap the insurers remain and spawns the suggestion takeovers could be on their way elsewhere too. Chaucer is still demonstrably cheap at 47p, its share price backed by tangible assets amounting to 41.9p per share and the flow of future earnings from a very profitable company.
The Cox kerfuffle raises a point hinted at in a recent blog - an investor should monitor the news and trading statements from companies in the same peer group as his investment and those that suffer comparable business risks.
That's no no mean feat. But not only will this level of investigation assist in the regular process of appraising and measuring the value of your holdings, it may also help identify outstanding investment opportunities that turn up like truffles.
Truffles however, have to be sniffed out. By the time the hunting hounds can smell a quick turn, much of the advance will have passed, probably taken by market makers before the stock exchange even opens.
Unfortunately for me, I have no cash to invest further in the bargains currently present in the insurance sector. That said, keen profit-seekers might like to turn their noses in the direction of SVB.
The Artful Dodger
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