There were some major developments from Australia's bankers, grocers, insurers and telecom stocks last week. A few small-cap stocks have been on a cracking run while the looming spectre of a possible 'Grexit' has also weighed on the market.
Some great opportunities have popped up, and investors should take a closer look at some of their favourite stocks:
Banks + Insurers
Insurer Insurance Australia Group Ltd (ASX: IAG) and America's most famous billionaire Warren Buffett set the media on fire with an announcement that Berkshire Hathaway would take a 3.7% stake in the company.
Despite the fact that IAG shares soared on the announcement, the buy in actually looks like it could be a negative for shareholders with dividends and earnings per share expected to fall. Even more curiously, it looks as though Berkshire is effectively receiving 20% of IAG's business in return for just 3.7% of its capital.
Speculation also ran rife that Berkshire was eyeing off Australia's banks after Mr Buffett was quoted as saying "there's a good chance that five years from now, we will have bought one or more positions in Australian banks."
Motley Fool analyst/writer Mike King found that Australia and New Zealand Banking Group (ASX: ANZ) was one of the better opportunities right now, although I'm of the opinion that Mr Buffett will wait for a lending slowdown before making his entry.
In other banking developments, Westpac Banking Corp (ASX: WBC) is selling down its stake stake in subsidiary wealth management wealth management company BT Investment Management Ltd (ASX: BTT) in an effort to free up another $600-$700 million to fulfil higher capital requirements.
Hot Topics
- Adapt or die for free to air TV
- Stocks to buy if a 'Grexit' occurs
- National Australia Bank Ltd. (ASX: NAB) shares may only be worth $28.27
- Coca-Cola Amatil Ltd (ASX: CCL) shares could be worth $11.35
- Do you know the difference between volatility and risk?
- An IPO to rival Greencross Limited (ASX: GXL)?
- The next hot tech stock?
Fun Fact: Reserve Bank of Australia statistics show that the big four banks made 12 billion dollars from fees in 2014.
Finally, a positive IPO!
Initial Public Offering (IPO) Adairs Ltd (ASX: ADH) traded substantially above its offer price in the days after its launch this week. Many feared the IPO market was softening after Greenstone cancelled its $900m IPO a few weeks ago upon failing to get an adequate price for its stock.
It appears that investors are tired of coughing up high prices for companies with ordinary growth prospects like Medibank Private Ltd (ASX: MPL) and Myob Group Ltd (ASX: MYO). Over 50% of IPOs trade below their offer price in their first year out, and while Adairs isn't over that hurdle yet it just goes to show that offer price is an important consideration.
Metcash Limited (ASX: MTS) shares enjoyed a surprising recovery after a results release that wasn't as bad as expected. On the downside, Metcash let its high-performing automotive division go too cheaply, selling it to Burson Group Ltd (ASX: BAP) for $275m, some $75-$125m less than its estimated worth.
Fellow grocer Woolworths Limited (ASX: WOW) also enjoyed a rise this week following the resignation of its CEO – and despite the profit downgrade that went with it. Investors have pegged the outgoing executive as the source of the company's problems, but I'm not so convinced.
APN News and Media Limited (ASX: APN) followed in the same vein as Woolworths, jumping 5% after CEO Michael Miller announced his resignation – leaving the company to become executive chairman at News Corp (ASX: NWS), which also owns a 14.99% stake in APN.
Writer Owen Raskiewicz is still waiting eagerly for Yowie Group Ltd (ASX: YOW) to hit his preferred buy level of $0.50 – shares closed at $1.05 on Friday. It's early days yet but if the WalMart venture is successful, Yowie could hit the ball out of the park.
Amcom Telecommunications Limited (ASX: AMM) will join the Vocus Communications Limited's (ASX: VOC) stable after an overwhelming vote in favour of a tie-up between the two.
iProperty Group Ltd (ASX: IPP) provided its second positive market update this year, simultaneously increasing and firming up its previous revenue and EBITDA guidance. Given that iProperty is expecting to become cash-positive this year, the stock could be worth a look.
(Interested readers can find more info on iProperty's update here)
Cash Converters International Ltd (ASX: CCV) entered a trading halt prior to announcing the size of its litigation settlement in NSW. Cash Converters will have to pay $20 million plus court costs of up to $3 million, which is substantially less than the $40m suggested by some pundits.
Shares that looked good value at $0.66 rapidly soared to $0.77 upon resuming trade, and could rise further in coming days.
Atlas Iron Limited (ASX: AGO), Sonic Healthcare Limited (ASX:SHL), and Monadelphous Group Limited (ASX: MND) – among others – also updated the market during the week.
