Posted by: jhamon | July 16, 2009

While S&P May Have Bottomed, M&As Have Not

From the WSJ’s Deal Blog:

That was the question the Deal Journal posed to most of the heads of M&A at the investment banks around town the last few weeks. We also bounced it off many of the big M&A lawyers around New York, wondering if any of them were ready to step out and proclaim deal activity had bottomed out and would start a climb back…

One strong data point in favor of those weary of calling a bottom comes from a chart, used by J.P. Morgan & Chase investment banking head Douglas Braunstein in a conference late last month with international deal lawyers. It shows that in the two previous recessions, M&A activity appeared to bottom out after the recession was done, then slowly pick back up.

M&A Has Not Bottomed

M&A Has Not Bottomed

Well, maybe.  I know this: our factor model shows 823 broken stocks (shorts) to 159 fundamentally strong stocks (longs).  This isn’t a trading idea (most of the shorts are too low to trade), just an observation of current fundamental conditions.


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