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Kraft Heinz abandons Unilever offer

Kraft Heinz abandons Unilever offer

Just days after Kraft Heinz announced a potential offer for UK Dutch giant Unilever the company has withdrawn from the situation. Even though the initial approach was rejected by Unilever, Kraft Heinz had been extremely vocal in the marketplace suggesting talks would happen sooner rather than later and the company was “still confident”. There is no doubt that the two companies would have been a good match although whether conditions attached to any such deal, by competition commissions around the world, would have made it untenable is debatable. So, why did Kraft Heinz abandon its Unilever offer so quickly?

Resistance from Unilever

Some shareholders will point a finger towards Unilever’s management and its apparent refusal to talk to Kraft Heinz. The reality is that this is always the initial announcement from a target company until it can put together a credible plan to maximise shareholder value. The very fact that Unilever and Kraft Heinz issued a joint statement on Sunday evening, announcing the end of any potential offer period, indicates the companies have spoken to a certain extent. Continue reading “Kraft Heinz abandons Unilever offer”

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Lessons to be learned from the old investment gurus

Be wary of companies buying back their own stock

While George Soros, Warren Buffett and Bill Gates to name but three investment gurus, are certainly getting on in years, they are still as sharp as a tack when it comes to investment ideas. The world of investment may have moved on, the strategies of years gone by may have been replaced but one thing you can’t replace, the value of experience. These three investment gurus have decades of experience between them and to say they have “been there, done it and bought the T-shirt” is an understatement. So, what lessons can we still learn from the old investment gurus?

Have the courage of your convictions

If we take Warren Buffett for example, his multibillion-dollar investment vehicle has a portfolio which consists of just 90 companies. While some of the shares may offer exposure to individual sectors, this is not a massive spread of investments and is mostly stock specific. This means that the company have taken individual bets on individual shares with Apple a prime example. Between the third and fourth quarter of 2016 Berkshire Hathaway quadrupled its investment in Apple. This is a phenomenal investment worth approaching $8 billion and is in itself a significant bet on the technology sector. Continue reading “Lessons to be learned from the old investment gurus”

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Bill Gates thinks robots should pay taxes

The pros and cons of low liquidity stocks

Bill Gates is part of an exclusive group who very often have ideas before their time and can on the surface look a little eccentric. The billionaire’s latest idea may well come into that bracket but he gives a very good argument as to why robots should pay taxes. Many believe we stand on the crest of a wave of robotics taking over many parts of the employment market. Robots are not new but when you put them together with artificial intelligence this is a whole different ballgame.

Backed by the European Parliament

The idea that robot should pay taxes has been backed by the European Parliament which itself believes we need to address the idea sooner rather than later. In reality, if a robot is able to save significant money on labour costs then this should in theory drop into the bottom line and companies would pay tax on larger profits. However, there is a lot more to this argument than just cost savings and increasing profits. Continue reading “Bill Gates thinks robots should pay taxes”

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Could Brexit put UK companies at risk from US counterparts?

Do tax havens impact stock markets?

Today’s revelation that Kraft Heinz has approached Unilever with an indicative merger offer valued at between £100 billion and £115 billion caught many in the market by surprise. The company has so far rejected overtures from its US counterpart but many believe it is only matter of time now before the company merges with another sector giant. This now begs the question: Could Brexit put UK companies at risk from US counterparts?

Currency situation

Since the Brexit vote last year sterling has fallen by over 20% against the dollar and is starting to weaken again after disappointing sales figures today. When you bear in mind that we are only just entering the process of negotiations between the UK and the European Union there is much more to come. Both sides will need to play hardball to get the best deal so there will be rumours and counter rumours, defeats and victories which could all impact the exchange rate. Continue reading “Could Brexit put UK companies at risk from US counterparts?”

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Unilever rejects shock Kraft Heinz offer

Unilever rejects shock Kraft Heinz offer

Anglo Dutch giant Unilever has today rejected an indicative takeover offer from US group Kraft Heinz which is believed to be between £100 billion and £115 billion. The company’s share price increased by 12% on the stock market today as investors woke up to this surprising news. So, where does this leave Unilever and will Kraft Heinz actually make a firm offer?

Friendly merger

While Unilever has been talking the talk, by rejecting the approach, Kraft Heinz still seems fairly confident it can sit down with Unilever and agreed terms in due course. At this moment in time there is no certainty that an offer will be made but many analysts believe that Unilever is now in play with an array of other companies potentially interested. The merger of Unilever and Kraft Heinz would create a group worth in excess of £200 billion. It is also worth noting that many analysts see significant cost savings if the two groups were to merge. Continue reading “Unilever rejects shock Kraft Heinz offer”

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Did George Soros get stung by the Trump rally?

Big, powerful and influential companies attract enemies

While George Soros has had the Midas touch in years gone by many are now beginning to wonder whether this touch is deserting him. This is a man who was extremely critical of Donald Trump ahead of the presidential campaign which resulted in a very negative forecast for the US market in general. The publication of his dealings in the final quarter of 2016 and early 2017 do not make for good reading. So, did George Soros get stung by the Trump rally?

Shorting exchange traded funds

It is believed that the George Soros fund took out put options against exchange traded funds investing in a small cap index and a large cap index. The idea was that Donald Trump would depress the markets and both small and larger companies would suffer. Data shows that these two funds have in fact rallied since late last year thereby creating paper losses in the hundreds of millions of dollars. It is unclear at this moment in time whether these positions have been closed or they are still open. Continue reading “Did George Soros get stung by the Trump rally?”

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Should governments be allowed to block any international merger?

Are tracker funds the way forward for investors?

Over the years we have seen some massive international mergers involving billions of dollars. While many of these deals make sense from a business point of view they are often investigated and sometimes amended by relevant governments because of competition issues. At this moment in time there are very strict guidelines regarding competition issues which are there to maintain a balance marketplace. So, should governments be allowed to block any international merger?

Cadbury takeover

When Cadbury was acquired by Kraft Foods just a few years ago there were serious concerns that the company would shift manufacturing capacity to the US. This was a company entrenched in UK history and a major player in the UK market. While initially Kraft Foods agreed to a number of conditions, protecting Cadbury’s UK presence, these conditions were effectively ripped up as soon as the deal went through. The fact that these conditions were not legally binding ensured that the US parent company had done nothing wrong and could not face prosecution. Continue reading “Should governments be allowed to block any international merger?”

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Apple working on wireless charging for iPhone

The risks of buying high premium stocks

If you look back over the years Apple has been extremely successful in controlling the media and building momentum before the release of new products and new services. We only need to look back at the launch of various iPhones over the years and the mass hysteria on launch night. While the company has been quiet so far, unwilling to officially confirm or deny, it seems certain that the next array of iPhones will have wireless charging.

Deal with chip giant Broadcom

We know that Apple is already working towards a wireless charging product with Broadcom. This was announced some time ago and the companies have been fairly active together over the years. It now seems as though the company is on the verge of delivering a wireless recharging service for the next generation of iPhones and this could be a game changer. Continue reading “Apple working on wireless charging for iPhone”

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Charlie Munger forecast difficulties for stock pickers

Should ground-breaking pharmaceutical companies be listed?

Charlie Munger, the vice-chairman of Berkshire Hathaway, has been talking about the difficulties which stock pickers have been experiencing during the current eight year bull market. This is a subject we have covered over the last couple of weeks, the fact that it is proving extremely difficult to cherry pick the best performing stocks and sectors compared to indices which continue to move higher.

Stock pickers have historically been able to cherry pick the best performing areas of the market and take advantage of bull markets by reducing their exposure to substandard performance stocks. Continue reading “Charlie Munger forecast difficulties for stock pickers”

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Artificial intelligence could decimate the financial sector

Artificial intelligence could decimate the financial sector

The term artificial intelligence strikes the fear of God into many people who have perhaps watched movies in years gone by where the machines take over the planet. There is obviously a concern that artificial intelligence could by definition become too powerful because if a machine is able to learn on a constant basis there really are no limits. A number of companies have sprung up over the last couple of years focusing upon artificial intelligence and the financial sector. So, what do these companies have to offer and what does the future hold?

Cost savings and revenue opportunities

Goldman Sachs believes that artificial intelligence will create up to $43 billion in annual cost savings and new revenue opportunities for the financial sector alone by 2025. This includes everything from stockpicking to trading, from financial instruments to personal bank accounts. There will be an impact upon the labour market but it is difficult to quantify at this moment in time simply because some employees will switch from advisory roles to more computer system orientated roles. Continue reading “Artificial intelligence could decimate the financial sector”