"....Consider the risks that acquisition-driven companies are heir to: that they pay too much for their victims, that they have problems integrating them, that the culture of the acquired firms does not gel with their own, and that the bosses spend too much time on the thrill of the chase. Indeed, the evidence indicates that acquisitions are more likely to fail than succeed.
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In the past five years alone, it has paid in excess of £2bn for acquisitions, and in the previous 10 years it most likely spent that much again. In other words, acquisitions probably account for over half its £7bn stock-market value. ....
According to Bearbull's models, the best-case scenario is that, over the next five years, the shares rise about £5 from their current £12.19, and the worst-case scenario is that they fall by £10. In other words, there is twice as much downside as upside. ....
I get values around £7-£8 per share, using average profits and cash flow from the past five years as the driving factor.....
....I have taken a short position in Wolseley shares for the Bearbull Hedge Fund."
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