In this Stockhead series, investment manager James Whelan, managing director Barclay Pearce Capital Asset Management, offers his insights on the key investment themes and trends in domestic and global markets. From macro musings to the metaverse and everything in between, Whelan offers his distilled thoughts on the hot topic of the day, week, month or year, from the point of view of a professional money manager.

 

Quite the brilliant podcast recorded last week with substantial relevance.

Heath and I talk to Dave Allen of Plato’s Long Short Alpha Fund. He’s an absolute genius and tells a good market tale too.

Listen here

Good ol’ days

I was recalling to some colleagues a time long ago one of my first broking jobs as operator/lackey for a hedge fund sales team.

One of my jobs of the day was to collate all the new merger and acquisition activity, calculate any arbitrage, update files on counter offers or increased bids…

Just basically track the M&A market.

I was never short of work.

That 2005-2007 period and post the GFC was a wonderland of small and mega deals.

One recalls it was an absolute banger of a deal in which one energy company made a counter takeover of another energy company that had made a takeover for them… and Mac Bank had to ask ASIC if ‘it was ok for them to have separate Mac Bank deal teams on either side of the transaction.’

It was. Just. Wild. Days.

Then it all dried up and it was only once in a while that something would come up.

Fast forward to this week…

…And BHP comes out with a monstrous, and quite complex, US$60bn takeover of Anglo American.

You don’t need to be a market insider to know the motivations because the BHP CEO mentions it about 40 times in any interview he’s given the last few days.

Copper.

Do you really want me to go over it again?

It went through a new two-year high of US$10,000/tonne into the weekend just gone and I’m still a buyer of dips.

Not only is the recent rally all, or mostly, about China, which accounts for 50% of global use. But the focus on the underlying reasons being the rise of EV cars in that country coinciding with the turnaround in China itself.

Then to have the head of the largest diversified miner in the world broadly announce that the reasons they want to become the biggest copper miner in the world is purely because there’s an inevitable shortage of the stuff and you get as clear a picture on the future as you need.

I thought I’d post a monthly copper futures chart (in pounds) dated back to when I started in broking.

The monthly candle for April is about as good as any on this chart.

Just. Staggering.

As much as I hate to be “that guy” you’d have to think that long term this potentially bangs its head on the ceiling before the next most probable thing happens to the upside.

Be. Sensible.

Japan. Wow. Gosh. Japan.

Meanwhile one of the big calls made towards the end of last year was to “go long Japan” on the unwinding of the negative rate position and yield curve control. There was a lot of money on the sidelines just waiting for inflationary urges to force their hand on investing.

Oh my, hasn’t this been something.

But with the Yen doing what it’s doing, being hedged was the way forward here. At the time of writing it’s just gone through 160 vs the USD which is the lowest since 1990.

Extraordinary things.

In the small cap space

Some brilliant news for a stock we’ve been following as well with Wellnex Life (ASX:WNX) announcing they’ll be dual listing in London.

Small moves in the Corporate space at the large end and the small end, showing that maybe – just maybe – we’re on the way back to the good ol’ days.

If that’s the case don’t throw out some of those small caps you’ve been holding for a while because takeovers happen to be infectious.

Wine and dash

Finally here’s a guy who ran the London Marathon during a wine tasting.

You just have to watch it. People are amazing.

All the best and stay safe,

James

 

The views, information, or opinions expressed in the interview in this article are solely those of the writer and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.

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