As if you needed any more evidence of the market's short-term thinking, the S&P/ASX 200's (INDEXASX:XJO) fluctuations –first up, then down over the whole Grexit situation last week was a case in point.
Our major index ended the week down roughly 1%, but that belied the nature of some of the updates released to the market in the past five trading days.
Flight Centre Travel Group Ltd (ASX: FLT) is a case in point, with shares nosediving 20% after the company's second profit downgrade and loss of market share this year. The sell-off appears to have been vastly overdone, and at least two Foolish writers – Mike King and Owen Raskiewicz – took the opportunity to stock up on shares at a discount.
(You can find Mike's and Owen's justification of their decision to purchase in their respective articles, here, and here)
Shares in Slater & Gordon Limited (ASX: SGH) also took a 20% haircut this week in what looks like a classic case of predatory short-selling. A UK investigation into Quindell PLC announced on Wednesday sent shares into freefall. Slater & Gordon management stated soon after that they believe they have zero liability relating to the UK investigation.
Rumours of an investigation also swirled around financial services company IOOF Holdings Limited (ASX: IFL), and shares in that company also declined 20% on Monday, before ending the week down 13%. The allegations are quite serious, and another scandal could be the catalyst for a long-overdue royal investigation into the sector.
Ultimately, financial companies and fund managers are opaque businesses with a lot of moving parts and it can be difficult for an investor to know if any wrongdoing has been committed.
Supermarket chain Woolworths Limited (ASX: WOW) also experienced a rough week, but found some last minute love yesterday after news reports that private equity company Kohlberg Kravis Roberts ("KKR") were putting together a bid for the company.
Woolworths declined to comment and KKR was unavailable for comment, and in the absence of any sources this rumour looks to be precisely that.
KKR's attempt to buy out Treasury Wine Estates Ltd (ASX: TWE) earlier in the year was foiled and I'm confident they are still looking for Australian opportunities, but they're going to need a tonne more cash – $35 billion plus, compared to ~$3.5 billion for TWE – if they want to take a tilt at Woolies.
Wesfarmers Ltd (ASX: WES) was also the source of a curious market update after management announced the purchase of a 13.7% stake in newly established oil and gas company Quadrant Energy. Quadrant is also part-owned by Macquarie Group Ltd (ASX: MQG) and represents an interesting use of Wesfarmers' hefty cash balance. Previous investments in coal haven't gone so well so let's hope oil and gas pans out better.
On a happier note, junior services company Macmahon Holdings Limited (ASX: MAH) surged more than 50% on the announcement that it has sold its Mongolian business for US$65 million, in what could be a 'transformation' for the company.
Oil and gas services player MMA Offshore Ltd (ASX: MRM) also leapt 10% to 61 cents after the announcement it has won a $100 million contract with US giant Chevron.
Junior miner Atlas Iron Limited (ASX: AGO) is raising $180 million from shareholders in efforts to fend off financial collapse. While the company is making a profit at today's prices, it still has very limited upside and significant downside risk.
Energy Resources of Australia Limited (ASX: ERA) carries even more risk – without the profit – after it announced the closure of its only operating mine in the Northern Territory. ERA has been a spectacularly bad investment and I suspect many investors will be happy to see the end of it.
AMA Group Ltd (ASX: AMA) and My Net Fone Limited (ASX: MNF) also went into the process of raising capital during the week, and attracted the ire of analyst Mike King after both companies neglected retail shareholders in favour of offering discounted shares to 'sophisticated' investors.
Retail investors are no stranger to getting the sharp end of the stick and it's worth giving a second tip of the hat to management at Corporate Travel Management Ltd (ASX: CTD), which has raised capital twice in the past 18 months and treated existing shareholders with fairness on both occasions.
Elsewhere in the market, merger and acquisition activity is still going strong, with Skilled Group Ltd. (ASX: SKE) finally announcing its acceptance of a sweetened merger offer from Programmed Maintenance Services Limited (ASX: PRG).
A2 MILK FPO NZ (ASX: A2M) shares leapt 30% during the week after the company announced it has received two takeover offers, one of which came from fellow ASX staples company Freedom Foods Group Ltd (ASX: FNP). It remains to be seen which of the two competitors will win out, but a2 Milk shareholders look to be winners and grinners either way.
Two newly formed small-caps also came to the attention of this Foolish contributor during the week, with rent.com.au hoping to be the next REA Group Limited (ASX: REA), and National Vet Care hoping to replicate the success of Greencross Limited (ASX: GXL). It's early days yet but both companies appear to be worth a closer look.
