Deals. Deals. Deals. M&A was on the minds of the Fast Money Traders this morning. Karen Finerman and Tim Seymour were each weighing how to set up their portfolios to best profit from consolidation in the New Year. “I think we are going to see a lot more deals,” said Metropolitan Capital’s Finerman.
Tim Seymour, EmergingMoney.com, was banking that the global mining industry would be especially acquisitive in 2011. Rio Tinto , one of the world’s largest mining and exploration companies for aluminum, copper, diamonds, iron and gold, was “combing the world for deals,” Seymour said.
BHP Billiton was also likely to be an acquirer, Seymour said. The global mining and minerals company still has at least $13 billion to put to work, even after announcing a $10 billion share buy-back. The company had tried to buy Potash earlier this year for nearly $40 billion.
Options Action trader Mike Khouw was watching the technical indicators driving deal making. Historically, deal activity reached its zenith when prices were high, not when assets looked cheapest, Khouw noted. In the New Year, companies may excersize more prudence, he said. “Companies are going to start taking a look at risk and… whether these mergers are a risky situation,” he said, striking a note of caution on betting too heavily on M&A.
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