The market is down 15. The SFE Futures suggested a 23 point fall in the market this morning.
The Dow Jones closed down 26.5 overnight moving in a relatively narrow 59 point range and closed down for the first time in three sessions on the back of figures showing confidence in the homebuilding industry had fallen to a 16-year-low. There was a heap takeover talk overnight, The Wall Street Journal reported Nylex Holdings (nothing to do with our Nylex Limited in Australia) has held preliminary discussions with possible buyers and The London Times said BHP Billiton has revived plans for a $40bn takeover of Alcoa (Alcoa is still trying to buy rival Alcan Inc. for $28.4bn). In company related news, Yahoo Inc. co-founder Jerry Yang will replace Terry Semel as chief executive and the Dow Jones finished slightly higher on the back of reports that publisher Pearson and CNBC owner GE are in talks about a potential rival bid.
Resources down today. BHP down 22c to 3446c and RIO down 127c to 9872c. Metals mostly down overnight. Aluminium down 1.7%, Zinc down 1.6% and Nickel down 4.5%. Zinifex up 2c to 1890c. Copper up 0.5%. Oil price up $1.02 to $69.06 after the Nigerian oil unions called a nationwide oil strike to begin on Wednesday and on the back of two Nigerian oil facilities being attacked by villagers and gunman. Woodside up 35c to 4630c. Gold up $1.20. Newcrest up 7c to 2378c.
The talk about BHP Billiton (BHP) bidding for Alcoa appears to have some substance with BHP appointing Merrill Lynch as advisors. There is an article about it in The Times in the UK suggesting they will make a $40bn bid. The message is that they looked at it in February but Chip Goodyear decided to spend the money on a share buyback. With Marius Kloppers soon to be in charge they have revived the idea…he is expected to be more aggressive on the acquisition front.
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- Nickel stocks taking a bit of a beating on the fall in the nickel price. Nervousness in the sector has been piqued by a couple of major broker research comments last week suggesting a short-term nickel price collapse. Jubilee Mines down 3%, Independence Group down 3.9%, Mincor down 3.1%.
- Symbion Health (SYB) announced they received a second bid from Sigma (SIP) for their consumer and pharmacy businesses worth $1.09bn, $42m more than the $1.04bn offer made earlier in the month by Healthscope (HSP) and private equity. SYB up 2c to 429c, SIP up 1c to 232c and HSP up 2c to 548c.
- CSR Ltd (CSR) announced they will invest $50m to construct a Bradford Gold glasswool insulation manufacturing plant in Brendale, QLD. CSR down 2c to 340c.
- IRESS (IRE) up 1c to 934c after announcing they have made a South African acquisition this morning paying $8.4m for a financial planning software provider. They have been a phenomenal performer since listing and are up from 700c to 933c this year alone.
- Murchison Metals (MMX) up 91c or 22.5% to 494c on the back of news that they combined with Mitsubishi for the development of their A$3 billion Jack Hills iron ore project. Mitsubishi will pay A$150 million for a 50% stake in the mid west iron ore developer. Iron ore stocks are enjoying the message from Fortescue Metals yesterday that customer demand for iron ore has prompted a plan to expand production by 100%. FMG down 2.6% this morning.
- Iron ore developer Gindalbie Metals (GBG) is up from 93c on Friday to 103c today (up 8% today) after being mentioned in the press and the Marcus Today Newsletter yesterday. They have recently done a deal with Ansteel (China) who took a 12.94% strategic stake.
- Ten Network (TEN) fell 4.2% to 297c yesterday on news that 56.4% shareholder had failed to find a private equity buyer for its stake and would hold on to it instead. PE 14.6x rising to 17.3x on the back of a 4% fall in earnings this year. A Yield of 5.1% going to 5.9% 100% franked provides support. TEN is in a trading halt pending the details of the announcement. The President of CanWest has said that “We also believe that there is scope for providing significant cash distributions to Ten’s shareholders in the future, including by way of returning capital and/or offering to buy back shares, without limiting its prospects for growth”.
- Publishing & Broadcasting (PBL) up 5c to 1920c despite receiving a few broker downgrades this morning on the back of cost overruns at Macau. You might remember the Crown Casino under Lloyd Williams having the same problem and the thing almost going out backwards (at much cost to shareholders) before being bailed out at the bottom by Packer. PBL is now down from $22 on the announcement of their split a month ago. Packer’s got his eye off the ball getting married (I couldn’t go).
- Huge turnover in Investa Property Group (IPG) this morning with over 112m shares or 7% of registered stock changing hands. Talk is that Morgan Stanley Real Estate is building a stake to complement their 308c offer. Price now 300c.
- Macarthur Coal (MCC) up 25c or 4.2% to 616c today after confirming full year profit guidance of $63-73m at the UBS resources conference.
- Wilson HTM (WIG) the broker (sorry — wealth management business) has listed this morning at 200c and is doing a Platinum Asset Management – up 62% or 125c to 325c. They have $3.3bn of funds under management and boast a 38% compound earnings growth since 2004. They have sold 13.3m shares. There are 95.7m shares on issue. Earnings per share forecast is 14.6c putting them on 22.2x. There will be some happy chappies on Collins St this evening. They highlight the chase for “Client alpha” – Alpha is the financial theory expression for returns that are over and above “beta” or market returns. In other words they are looking for better than market returns for clients. You know what they say – it’s the top of the market when the brokers are selling. Problem is, they haven’t really sold the shares, they still hold them.
- Macquarie Airports (MAP) up 5c to 430c as they tell us they are considering what to do with the proceeds of the sale of their Rome Airport stake. A share buyback or special dividend is on the cards.
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