The M&A Market: When This Number Falls, Expect the Takeovers to Heat Up

by Louis Basenese, Advisory Panelist

When the credit markets froze solid last year, equities hit the skids, the economy tanked and so did the number of announced mergers and acquisitions (M&A).

But now the stock market’s on the mend. In my book, a 49% rally off the bottom for the S&P 500 qualifies as healing.

The economy’s showing signs of improvement. First-time jobless claims have dropped more than 15% since peaking in April.

As for the M&A market, well, it’s still suffering…

Through the second quarter, volume dropped 40.2% worldwide. Deals involving U.S. companies fared worse, dropping 57.5%, according to Thomson Reuters. And July marked the first month in over a decade when not a single deal worth $5 billion or more was announced.

But if you’re serious about investing, you need to know when the M&A market is

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We spent the morning musing on the Maginot Line. The French built this elaborate line of fortifications along its border with Germany in the 1930s to thwart an invasion by its Great War enemy. When Germany invaded France in May 1940, Adolf Hitler’s armies simply bypassed the line and invaded France through neighbouring Belgium. The Maginot Line proved to be an elaborate dud.

As Nassim Taleb points out in his book The Black Swan: The Impact of the Highly Improbable:

The story of the Maginot Line shows how we are conditioned to be specific. The French, after the Great War, build a wall along the previous German invasion route to prevent reinvasion – Hitler just (almost) effortlessly went around it. The French had been excellent students of history; they just learned with too much precision.

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Childrens Investment FundChildrens Investment Fund | Hedge Fund NotesJust a quick note to let you know we have updated the Hedge Fund Tracker profile for the Children's Investment Fund.To view the update please see the profile created for this group here: Children's Investment Fund Management TCIRelated to Childrens Investment Fund | Hedge Fund Notes Updated:Tantallon Capital | Hedge Fund ClosureCerberus Capital Management LPR3 Capital Partners LPSalida Capital | Hedge Fund NotesOch Ziff Capital Management GroupPowe Capital Management LP | Rory Powe...

The Treasury’s plan to inject $250 billion in capital directly into US banks is underway. But William Patalon III says some of these taxpayer funds will be used by big banks to acquire junior competitors. This means the increase in lending that the plan is supposed to spark will be modest at best. And less competition in the banking sector could mean a rise in fees going forward.

This from Money Morning:

While the U.S. government’s plan to invest $250 billion into U.S. financial institutions has been billed as a strategy that will bolster the health of the banking system and also jump-start lending, the recapitalization plan is likely to have a secondary effect – one that whipsawed U.S. taxpayers likely won’t be very happy to learn about.

Those billions are a virtual lock to set off a merger tsunami in which the biggest banks use taxpayer money to get bigger

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While the U.S. government’s plan to invest $250 billion into U.S. financial institutions has been billed as a strategy that will bolster the health of the banking system and also jump-start lending, the recapitalization plan is likely to have a secondary effect – one that whipsawed U.S. taxpayers likely won’t be very happy to learn about. Those billions are a virtual lock to set off a merger tsunami in which the biggest banks use taxpayer money to get bigger – admittedly removing the smaller, weaker banks from the market, but ultimately also reducing the competition that benefited consumers and kept the explosion in banking fees from being far worse than it already is. One last point: Experts say that takeovers financed by the government infusions are likely to have less of a beneficial impact on the economy than an actual increase in ...

Citadel Investment GroupCitadel Investment Group | Hedge Fund NotesJust a quick note to let you know we have updated the Hedge Fund Tracker profile for Citadel Investment Group, LLC.To see the updated profile for this fund please see this page: Citadel Investment Group LLCRelated to Citadel Investment Group | Hedge Fund Notes Updated:Hedge Fund Tracker ToolSalida Capital | Hedge Fund Notes, Performance & NewsOch Ziff Capital Management GroupPowe Capital Management LP | Rory PoweAbsolute Capital Management | Jonathan TreacherThe Blackstone Group | Kailix AdvisorsTremblant Capital Group ...