Tuesday, March 07, 2006


The past couple of weeks I've harbored a sneaking suspicion that, rightly or wrongly (I think you know which), sentiment might turn. The capitulation of some big name analyst teams, as well as the frequency with which I now hear the phrase "disruptive technologies" coming out of analyst mouths, led me to suspect that the sentiment gauge might have gone too far. I have a theory that a good proportion of fund managers actually employ analyst calls in aggregate primarily as a contrarion indicator, looking for reliable buy or sell signals when analyst sentiment is either overwhelmingly positive or negative. (Last year I made a chart which I thought demonstrated this pretty nicely - sadly I haven't had a chance to update it.)

Yesterday was a bad day to be a telecom bear. Building on Vodafone's mooted exit from Japan announced late on Friday, The Business put names to the shadowy PE investors allegedly circling BT. KPN CEO Ad Scheepbouwer was reported by Reuters to have said in an interview with Dutch retail shareholders' association VEB that the fundamental value of his company is above EUR9 per share, "because there is much hidden value," and takeover premiums of between 25 and 60% were customary. Well, I guess that's muy claro, no? - I guess we're talking about the EUR11.25 to EUR14.40 range then... The AT&T news simply provided a bit more nitrous oxide to propel us into the dizzy heights of M&A euphoria. Or was it just short covering?

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