Big Deals

Value investors are back in the market this week as one of Australia’s best-known value-based managers, Maple-Brown Abbott, acquired a big stake in Salmat (SLM), one of the stocks hit hardest in the recent correction.
Salmat plummeted 30% on May 12 in response to the news that the group had lost the lucrative account from Coles Myer. In the days since then, Maple-Brown Abbott has paid about $23 million to buy 6.75% of Salmat. Maple-Brown Abbott has been showing some support for rubber manufacturer Ansell (ANN), building its stake from 7.1% to 8.1% at a cost of $7.3 million.

Morgan Stanley has been busy buying up Telecom New Zealand (TEL) after a recent regulatory decision saw the stock fall 25% over 10 days. In May, the New Zealand Government outlined its plans to regulate mobile phone charges. The stock promptly took a nose dive, losing $2.3 billion of its market capitalisation. Anticipating that the correction had gone too far, Morgan Stanley began acquiring the stock and in an announcement to the exchange said it had bought 97 million shares for $365 million.

Building materials manufacturer Boral (BLD) has come under the attention of MIR Investment Management. After hitting a peak of $9.97 on May 10, the stock has fallen sharply. With a recovery in housing signposted by a recent report from the Australian Bureau of Statistics that showed the NSW housing market is turning around, MIR paid $250 million for 5.06% of the $5-billion building materials company. At the same time, MIR has taken a large stake in agricultural services provider Futuris (FCL). Its share price has been quite volatile since February, fluctuating between $2.10 and $2.35.

Last week we noted that the Commonwealth Bank had developed an appetite for tech stocks, a taste it has been indulging further. Already holding 7.88% of the online accommodation company Wotif.com (WTF), the bank has acquired a further 1.20% of the company at a cost of about $8 million. Importantly, the bank is now paying a 65% premium on the stock, when compared with the listing price. Separately, the bank is also showing some faith in the embattled Multiplex Group (MXG), picking up $28.5 million worth of stock in the construction group.

Experienced fund manager Capital Group is getting out of the clothing retailer Just Group (JST). Just Group hit a low of about $1.80 in May 2005 but has since recovered in leaps and bounds and has been in a stable trading range between $3.40 and $3.55. In an announcement made to the ASX on June 16, Capital Group said it was reducing its stake in the clothing group by 5.38% to 4.38%. Capital picked up about $4.2 million through the sale of 1.2 million shares.

As travel company S8 (SEL) has gone on a $500 million buying spree, astute takeover specialist MM&E Capital has quietly built stakes in a number of S8’s intended targets. After making offers for Travelscene and Travelsonic, S8 has made a play for Gullivers Travel Group. At the same time MM&E has been making purchases in Gullivers and announced last week that it had purchased a million shares for just under $2 million.