It often pays to view a company’s acquisition strategy with some degree of scepticism. Most CEOs would like to run a larger company. Achieving this through acquisition isn’t always value enhancing for shareholders. Private Hospital operator Ramsay Healthcare’s (RHC) recent beachhead in France does however have the hallmarks of a considered approach.

Sell NAM, Buy GMI

Myer’s glamorous listing in November last year has ended up in the January bargain bin. When we reviewed the IPO, we were concerned about the level of pricing but happy enough with the reinvigorated strategy of the company. We also said we would prefer to wait for the results of the Christmas trading season before considering a recommendation on the stock.

Archer Capital, the private equity owner of the Rebel Group retail chain, has decided not to proceed with the float of the retail group. Not so hot on the heels of the two previous retail floats last year, Myer and Kathmandu, which have both subsequently underperformed the market, Archer Capital appears to have decided the timing is not right to offload its asset.

Given the vast amount of data and news items that an investor must absorb on a daily basis, it’s easy to lose sight of what really matters with regards to share prices. The bottom line is that earnings and earnings expectations drive share prices and day to day volatility is simply a reflection of the rather bi-polar market’s current opinion on the matter. Results season is therefore a critical period for the market, allowing the calibration of valuations to reality, accounting shenanigans not withstanding.