Independent – Anyone can be a hedge fund manager. Can’t they? These days, the City’s richest professionals seem to spend all their time punting on bid situations. If they get it right, it can prove to be hugely profitable. The key, as with all business, is a proper understanding of the risks and rewards associated with each trade.
Interesting takeover situations are by no means limited to big-cap stocks. Presently, there is plenty of corporate action in the smaller companies arena. Take Get Group, for instance. On Monday, the company admitted to having received a takeover approach after a sharp jump in its share price. Before the whole saga kicked off, Get stock stood at around 135p. On Friday, it closed at 157.5p.
City sources say that if the offer is to have any chance of success it will have to be pitched at 250p or above.
Get is the UK’s leading designer, manufacturer and wholesaler of electrical appliances. Controlled by the Joseph family, who own 60 per cent of the group, it floated 10 years ago and moved down to AIM eight months ago.
Get made a profit of £3.1m last year. This is forecast to rise to £3.2m this year and to £3.6m in 2007. It leaves the company trading at 11 times next year’s earnings with a prospective dividend yield of 4.5 per cent.
