Salamander Energy
Recent weeks have been hugely eventful for investors in Salamander Energy (LSE: SMDR), with the South East Asia-focused exploration and production company being the subject of various bid approaches. In the end, it was Ophir Energy that agreed to buy Salamander for around £314 million, following Cepsa pulling out of the process, saying that had never actually made a formal bid.
Investors in Salamander will receive 0.57 shares in Ophir Energy in return for each share in Salamander, which values Salamander at around 116p per share. That’s a far higher price than shares in the company are trading at today, with their being down 8% at 57p.
This could indicate doubt among investors as to whether the deal will lead to improved performance from the combined group, with the synergies and access to better funding sources that are the key reasons for the deal seemingly failing to stimulate investor sentiment.
Of course, with the price of commodities such as oil being weak, declining sentiment is a feature of the wider sector. As such, while short term weakness could continue, the combination of Ophir and Salamander could prove to be a positive move for investors in both stocks, provided it can deliver the cost savings and efficiencies that have been identified.
Kenmare Resources
Shares in Kenmare Resources (LSE: KMR) are continuing the decline that has seen them fall by 29% in the last week — they’re down 16% today. This follows many months of disappointing share price performance that means they are now down 82% since the start of the year.
Of course, such a significant fall in any company’s share price can mean that bid potential may be increased and in Kenmare’s case it’s in early stage talks with Iluka, a significant producer of zircon, regarding a potential takeover. This news doesn’t seem to have improved investor sentiment in the company, even though Kenmare’s third quarter results also highlighted that the company had increased total shipments of finished products by 24%.
Furthermore, with Kenmare forecast to move into profit next year, its share price could gain support — especially if there are positive developments with regard to a possible offer for the firm. While allegations of not fulfilling contractual obligations in Mozambique could hurt shares in the short run, Kenmare could be one to watch over the medium to long run.
Concha
Shares in investment company Concha (LSE: CHA) have been hugely volatile in recent days. For example, earlier today its shares were down as much as 23%, but they have pulled back much of this fall during the course of the day.
Of course, even double-digit percentage movements in its share price are relatively small fry for Concha, since its shares are up over 2,000% since the turn of the year. The fascinating thing, though, is that the company is yet to make a vastly successful investment, so the gains appear to be as a result of investor optimism in what could lie ahead for the company, rather than tangible bottom-line success.
As with all small companies, Concha is high risk and, having risen by 2000% this year, much of its potential success may have already been priced in by the market. As such, it may be best to watch, rather than buy, Concha at the present time.