I think the UK stock market is the place to look for potential shares to buy. And that’s not just my view.
Despite the FTSE 100 being close to all-time highs, institutional investors are still seeing plenty of opportunities. But is that a good thing?
Buying opportunities
UK shares have been attracting attention from institutions recently. During the last few years, several companies have either merged or been acquired.
The interest in the UK stock market reflects the fact that valuations have been attractive. And there’s still plenty of interest at the moment.
FTSE 100 testing company Intertek is one of the latest names to emerge as an acquisition target. And it looks like the deal is done.
The firm looks set to accept a bid worth £60 per share. That’s a 59% increase from where the stock was before the interest emerged.
Another stock attracting interest is Gamma Communications (LSE:GAMA). I own this one and I’m working out my next move.
In the last week, the firm named a number of interested party. And the next couple of weeks could be pivotal – one way or another.
What’s been happening?
The latest news is that Epiris, Providence Equity Partners, and Oakley Capital-Giacom have emerged as potential buyers. And they have until mid-June to make a bid.
As a shareholder, the timing isn’t ideal. The stock has been faltering despite the underlying business doing pretty well.
From my perspective, that’s when I want to be buying shares – not selling them to someone else. But the move isn’t entirely unreasonable.
Gamma is in an interesting situation. There could be a huge opportunity as the UK retires its copper phone network at the end of the year.
The trouble is, that’s going to be expensive in the short term. So the business might ultimately do better as part of a larger organisation.
I can see the rationale. But I think any takeover bid has to reflect that potential in the price and I’m not convinced it will.
Selling low
When Gamma’s takeover story emerged, the stock was around 70% off its highs. As an investor, however, that’s not when I want to be selling.
I’d much rather see the firm looking for buyers when the stock is expensive than when it’s cheap. But that’s probably not realistic right now.
Left to its own devices, it doesn’t look like the share price is going to get back to its previous levels. And that’s why management is looking around.
It’ll be interesting to see what happens between now and 13 June. So I’m marking my calendar and keeping a close eye on updates.
My general feeling, however, is that I’m disappointed. It looks likely to me that the company is going to be sold for less than I think it’s worth.
