This might just be a candidate for investment comment of the year from Robin Geffen and it’s only January. Speaking of Cadbury’s takeover, he says: “This deal is ultimately bad for everyone: shareholders don’t get a full value, bank holders will likely suffer a down grade and employees will lose their jobs in large numbers. Sadly, Cadbury’s management won’t fight on and too many large shareholders are focused on very short-term performance.”
Well said Mr Geffen.
Now clearly some of the big institutional long term share holders such as Legal & General are not happy with the valuation either but seem resigned to it.
There is certainly a case to be argued that a very competent management are being replaced by one that is less so with more debt and a less well defined strategy.
I also wonder where retail investors stand in this. As an industry we tell them investment is for the long term or in the case of Isas for the medium term – five years at least. Efforts are made to discourage them from too much profit taking if the long term prospects are good for their investments. It may not be a direct comparison but it is at least related, given what most say are the long term prospects for Cadbury’s share price which surely suggest it is undervalued at the price to be paid.
And a final question for fund managers which actually I have never asked before. How much should you now be considering the profile of the other investors in a firm when you commit a large amount of money to a share?
