FTSE 100’s Record High
On the face of it the push for the FTSE 100 blue chip index to record highs is a vindication of the London stock market and the way it currently operates and is regulated. Indeed, for this milestone to be achieved despite all the Kafkaesque rules / red tape and punishing costs, is even more of a win. If one throws in a government who’s goal is to destroy all centres of wealth, to make everyone poorer and forced to vote Labour, the milestone is a miracle, underlining the power of capitalism against all the odds. That said, the drivers of gain are the chronic undervalue of UK stocks, and the likelihood of our blue chip companies being taken over by international rivals / private equity. The fact that many companies in the FTSE 100 have vast international footprints makes this all the more likely.
Small Cap Trickle Down
Of course, while the blue chips may have been enjoying themselves, the question of whether the minnows are back in business after 4 years of hell is another matter. The swimming through concrete (wet of course) feeling has not subsided in most cases, other than the Bitcoin Treasury strategy brigade. However, this and the AI boom have given those looking at the lower end of the market something to shoot for. The key will be whether after the massive June spike in this space, we will get a second wind before the summer is over.
Luckily, it would appear that Bitcoin itself will come to the rescue, as it pushed to record highs towards $120,000 this week. Given that by definition, one of the purposes of buying into BTS stocks is that they are a heavily geared play on BTC, this should be good news. For instance, most of the BTS plays were in around $105,000, versus the peak of $118,000. This means that the average gain should already be some 10%, not shabby in just a few weeks. If we are treated to further gains towards $150k and beyond by the end of the year, boosted by BTS companies buying BTC, we could be witnessing something close to a perpetual money machine for those in the space.
The hope would be that gains that have been made in the market via BTS stocks would be available for those companies who have not decided to abandon their current sectors and join the gold rush. Fortunately, it would appear that those who were going to switch sectors have already done so, and that the market is becoming more discerning regarding those BTS companies that are genuine plays, and those who are just “me too.” One would not of course want to mention any names in terms of who are the former, and who are the latter, although a list could be made available on request!
ZaksTradersCafe M&A
With the UK market, tariffs news permitting, at its best levels, we have seen a sharp pick up in M&A stories, both in the UK and abroad. Indeed, the highlight of late was ironically what turned out to be the denied story published by the Wall Street Journal a couple of weeks ago, regarding a possible merger between BP / Shell. This may have been a failed story, but it does underline the way that M&A is back. Indeed, it may be the case that we are only at the foothills of what is set to happen, especially if a bull market has already begun. Therefore, there will be a new section on this website focusing and reporting on M&A.
This has already had a win here with a profile on July 3 of US business process management company WNS Holdings (NYSE: WNS) could be the subject of a takeover after the deal fell over in the way of the stock market tariff slump. Sure enough, on July 7 a deal with Capgemini was confirmed. UK payments solutions company Boku (BOKU) has also been highlighted here from 195p versus 214p, something which underlines that even if a company is not subject to a deal it is very likely to be an outperformer anyway. Of course, our friends at outlets such as Bloomberg, Sky News, Reuters et al like to think that they have a monopoly on M&A stories.
But most of those who break the stories do not have 35 years knowledge of the field, and perhaps do not have the ability to sort out the wheat from the chaff. For instance, in the aforementioned BP/Shell, the WSJ should have known that in breaking the story, they most likely killed it, for now. Many of the biggest deals effectively have a clause that if the story leaks before the deal has been completed, it is binned.
