Question 1: In regard to the proposed takeover of Ramsay Health Care (RHC), what are your thoughts on the merits of hanging on hoping for this transaction to go through, versus selling now at a significant discount to the final bid price but locking in a gain?
Answer: The indicative bid for Ramsay Health Care by a syndicate led by KKR is at $88.00 per share. Ramsay would also be entitled to pay a fully franked special dividend, which adds another $3.60 to the value. Ramsay is trading today at $77.11 – a very considerable discount to the implied bid price of $91.60.
This says that the market has serious doubts about the bid materialising. Further, a few days after the bid was announced, Ramsay traded as high as $84.37 – so the trend is that as time moves on, the market is becoming less confident.
My best guess (and it is only a guess) is that no bid will materialise, and in due course, Ramsay will return to trading around where it was before, maybe a touch higher, about the $70 mark. I think the odds marginally favour selling now.
Question 2: The Dominos Pizza (DMP) share price has dropped from a high of $167 in Sept 21 to a current price of below $70. This, I believe, is due to market concerns of food inflation along with rising energy and labour costs, and the end of Covid lockdowns. Is it now in the buy zone?.
Answer: Dominos has a good history of “positively surprising” the market. That said, even after the fall, it is still trading on a pretty high multiple – 32.3x forecast FY22 earnings, 26.6x forecast FY23 earnings. Maybe the analysts are too bearish… but it is too pricey for me.
Although on value, they do like the stock. According to FNArena, of the 7 major brokers, there are 5 ‘buy’ recommendations and 2 ‘neutral’ recommendations. The consensus target price is $99.13 – 45.3% higher than the last ASX price of $68.24. The range is a low of $87.80 through to a high of $116.00.
Question 3: How can I find out which stocks are short sold?
Answer: ASIC publishes a list around midday each day. This lists each stock, the number of shares short sold, and short sales as a percentage of the total number of shares on issue. This is available here. [1]
The data is based on trades that occurred three days ago. So the report for today (Thursday 19 May) will show positions taken up to the close of business on Friday 13 May.
You can also look at our table in Saturday’s Switzer Report each week, which ranks the most shorted stocks.
Question 4: What are the codes of the new cryptocurrency ETFs?
Answer: There are three new cryptocurrency ETFs that you can buy on the ASX. These are:
- ETFS 21Shares Bitcoin ETF – code EBTC
- Cosmos Purpose Bitcoin Access ETF – code CBTC
- ETFS 21Shares Ethereum ETF – code EETF
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.