KEY POINTS:
The sharemarket's bull run in the past six weeks has included Contact Energy stock which has returned to levels that will comfort those shareholder who rejected Origin's takeover attempts this year.
Contact shares were trading at about $6.40 before the "merger" proposal in February. Supported by the Origin
offer, they went as high as $8.10 in April. But in June shareholders said no to the deal. Many - such as Brook Asset Management executive chairman Simon Botherway - said it seriously undervalued Contact.
When the shares then plummeted directors sent out a grumpy "I told you so" letter and a few shareholders must have wondered if they'd made the right call. But after hitting a low of $6.74 in August it has been mostly uphill for Contact.
One of the reasons for the most recent jump seems to have been the announcement on October 26 that Contact had secured rights to a further 170 petajoules of natural gas from the Maui gas field.
That addresses one of the company's biggest concerns, gas supply but the surge now seems to have gathered a momentum of its own, and the shares closed at $7.90 yesterday.
Holding on
Tower Asset Management continued to sell down its stake in Tourism Holdings this week - from 6.69 to 5.63 per cent. It had started the year with an 11.47 per cent stake.
Up to the end of September that selling had been balanced somewhat by the activity of a US private equity group led by Drake Associates. Drake and Co now have a 13 per cent stake after making several purchases which have fuelled speculation that a takeover plan may be imminent for the underperforming tourism industry investor. Nothing has eventuated so far and if there was a plan it appears to have been parked for some time.
That would fit with the view held by some well-placed mergers and acquisitions advisers who say several potential takeovers have been put on hold until changes to takeover legislation is completed.
The Takeovers Panel is seeking to close what it sees as a loophole which enables the use of schemes of arrangement and amalgamations to carry out takeovers by stealth.
Its concerns were highlighted when Transpacific Industries took over Waste Management. But the National Party stymied a Government attempt to fast-track the code changes when it wouldn't allow them to be tacked on to the Business Law Reform Bill.
National argued that due process still needed to be followed and that the changes were being fast-tracked only to head off Stephen Tindall's scheme of arrangement plan to privatise The Warehouse. Looks like speed is no long required to deal with that issue.
Tourism Holding shares closed up 1c at $1.86 yesterday.
Quiet times
Market activity was painfully slow as this week began. It almost came to a standstill on Tuesday, and things were so bad that big British and American hedge funds were asking after the release of the Reserve Bank's inflation expectations survey. You'd have to wonder why they cared as the last one was based on only 74 responses, noted one observer between yawns.
But while it has been quiet on the corporate front in the past couple of weeks, those in the know say plenty is bubbling under the surface.
History would suggest we may be in the calm before the storm as business gears up for a final pre-Christmas rush of merger activity.
Christmas drinks
One deal with a pre-Christmas deadline is the sale of Independent Liquor. December 6 is understood to be "D-day" for the bidders. So some sort of sale announcement looks likely before the end of the year. A story doing the rounds is that Lion Nathan will be up against it in the sale process because the Erceg family has never forgiven the company for the aggressive way it behaved in Independent's early days. It is not known how much weight to give that story and from which interested party it emanates.
Telecom
It has taken a while to sink in, but jitters about the December 5 parliamentary select committee announcement on Telecom now seem to be overshadowing positive sentiment on the stock. The select committee is expected to include a strong recommendation in favour of Telecom splitting its retail and wholesale divisions. Telecom shares had a golden run between October 10 and November 7 as big international institutions retook positions they had fled after the unbundling announcement in May.
For a brief moment it looked like they might even crack the magic $5 mark. But in the past 18 days they have slipped back and closed at $4.57 yesterday.
If the outcome of the select committee review is as negative for Telecom as has been tipped, it would be nice to think that the downside would be comfortably priced in by December 5.
But markets are seldom that rational and regardless of how much Telecom has shed in the preceding days there is likely to be another sell-off. Perhaps that could yet be offset by more news on the Yellow Pages sale process.
Healthy return
Retirement village operator Ryman Healthcare's first-half profit last week was bang on Goldman Sachs JBWere's forecasts at $19.6 million, 15 per cent up on a year earlier. But analyst Matt Henry notes that the company's plans are well ahead of what had been forecast prompting him to review the "magnitude and probability of upside drivers" for the stock.
That's a wait and see verdict at this stage. Henry has retained his current recommendation - short term, market perform and long term hold - and target valuation of $10.73.
Ryman is a good operator and has demographic trends on its side, but Henry holds back largely because Ryman is already heavily priced.
He notes that the present share price implies considerable future growth.
But the good folk at ING certainly liked the story enough to pile in. They bought 750,000 shares worth $7.26 million on Tuesday to take their stake to 5.86 per cent.
The price has soared since mid-October when they traded below $8.50. The shares closed at $9.70 yesterday.
Asking the question
It's hard to say whether our market regulators have actually hardened up this year but - like a keen bowler - they certainly haven't been shy about asking the question.
NZX statistics show there have been nine formal share price inquiries this year compared to just five for the whole of 2005.
Many of the price inquiries are generated by a computer programme (called Smarts) which applies a hard and fast formula to ring alarm bells about unusually large price spikes and drops.
So given that we've had five of this year's inquiries since the start of October, it may just reflect shares spiking on the back of a buying frenzy that has sent the NZX-50 to record highs in the past six weeks.
But inquiries are also generated at the discretion of the NZX market surveillance team who take advice from the broker network and even pay attention to the humble business media.
For the record here are those of whom the question has been asked:
* Sealegs - November 21
* Abano - November 17
* Wellington Drive Technologies - November 14
* Richina Pacific - October 10
* Smiths City - October 9
* Plus SMS - May 24
* Postie Plus - May 10
* Provenco - May 8
* Renaissance - January 13
Plus SMS holds the distinction for being the only stock to feature two years in a row.