Bid Stories
A few years ago I broke the story about a FTSE 100 company that was taken over: Worldpay. This was my first such scoop, the first blue chip one, and something that as an aspiring journalist, I was very pleased with. Indeed, I received calls from the likes of Bloomberg both congratulating me, and how I had done it as I clearly do not have the international network that it has. At the same time, journalism is something of a closed shop, and therefore if you have not come up by starting at the Hull Gazette, and are better than Andrew Neil, it is difficult to make progress. Worldpay was compelling as a tip for the top, not least off the back of significant US buying in London on July 4. Someone was keen.
In the case of the next possible FTSE 100 takeover, which would be very nice, I wrote about Ladbrokes and Coral owner, Entain (ENT). The betting giant has not played its cards that well, perhaps getting a little too cocky. By cocky, I mean rejecting takeover offers in the past few years at multiples of the current share price. Admittedly, during the pandemic companies who relied on us being locked up were doing rather well. However, the sizzle at the moment for shares of Entain is actually the sizzle for JV partner MGM Casinos. In recent months the JV has taken off, so much so that it would now not be in MGM’s interest for ENT to be taken over by either the likes of Draftkings, or even worse, private equity. The likes of CVC or Apollo would be very tempted to acquire ENT and then sell off its businesses, as the sum of the parts would be much greater than the current £3bn market cap. At the same time if a third party took over ENT, MGM would most likely have to pay rather more than currently for the JV part of the business.
While insurer Hiscox (HSX) pipped ENT as the next name in the frame as far as being the next FTSE 100 bid target, the ENT story which those who trade M&A situations are currently highlighting, looks to be the next train to leave the station.
Listed Vehicles
This week I received a charming email from someone who described themselves as a special situations business investor. He asked my advice on whether or not to operate a listed vehicle as an alternative to setting up a formal, regulated investment fund? He was also curious to know the advantages / disadvantages that I have encountered having founded a listed company?
The short answer, and I will hopefully speak directly to this gentleman in coming days, is that I would not wish the listed company experience on even my worst enemy. This is only partly due to way it would appear that so many in the space actually behave like one’s worst enemy.
What can also be said is that win or lose, people want you to lose. I was described as a “useful fool” soon after listing, and from even before day one of raising the money, or the IPO had all the forces possible lined up against me both in terms of cost and advice. This meant that even if the company had subsequently joined the aforementioned FTSE 100, the journey would have been hell. I have heard from people who have succeeded in the small cap space that the deciding factor can very often not be money, strategy, or the markets, but actually the board / management.
They need to be closer to you than a sibling. Would I do it again? Of course I would, and likely do the opposite of everything done before such as listening to advisors, board members, and ironically, even shareholders. Alas that would appear to be the secret of success for a CEO: act like Genghis Khan.
This Week’s Stocks
I noted on Friday that Kendrick (KEN) is now up 31x on the year, a rally that started in January, from the time I interviewed it venerable supremo Colin Bird. One of the more irksome parts of the small cap space is the way that so many fly by night players come and go (obviously). But while they are here they either grandstand their calls, exaggerate their followers, or are simply hard sell merchants who bully unsuspecting CEOs into paying for a service they do not need, or even a service which is not a service. I mean does a listed company really need to pay someone a retainer for a website “hub” that they could perfectly well make themselves. Getting back to KEN though, what can be said is that the imagination of the market has been well and truly captured in terms of the rare earth story, and one has to give full credit and also congratulate those who have made money in KEN all the way up. Given that it has been suggested to me that the upside could still be another 10x from current levels, there could still be more to celebrate.
Another stock which I have been familiar with and I have highlights since the lows last month on a charting basis has been Bradda Head (BHL). Here, despite the low impact PR currently, the shares have risen nearly 3x on the year to date, with the latest driver being the announcement last week of a MOU with Tyson Energy. Such as deal has always been the missing ingredient the company needed, and we should be treated to further upside for BHL shares as we head into the summer.
Last month Scancell (SCLP) announced that it had received FDA Fast Track Designation for iSCIB1+ in advanced melanoma and provided a data update from its SCOPE Phase 2 study. Since then we have had no fresh news, yet the shares have rocketed. Presumably there is fresh news on the way, and a further re-rate for the developer of active immunotherapies to treat cancer.
