🕵 Burberry takeover?

There was a rumour from a Parisian-based blogger Miss Tweed over the weekend stating that Moncler was mulling a bid for Burberry.

The market deemed this credible enough for the stock to open up and uncross higher in the auction.

However, given the rally in recent weeks, was it in the price?

Moncler said that it won’t comment on “unsubstantiated rumours”… which isn’t a denial.

So we know that for now, there is some element of the takeover baked into the price.

We can see the stock opened up, fell, but rallied… showing that the market doesn’t believe the rumour is unfounded.

What happens next?

If Moncler comes out and denies any potential bid then we can expect the stock price to go back to the undisturbed price (assuming there is no other trading updates or news that can affect the price in between).

The undisturbed price is the price the stock was trading at before the takeover news was in the market.

Maybe we can add on a bit extra as it looks like the news was known before announced my Miss Tweed (given the rally).

And if it doesn’t, then the fact that Burberry is a potential bid target will sit in the price.

Potential Burberry trade?

Despite the profit warning in July Burberry has risen ~50%.

This tells me the trend could be changing.

However, that rise has come in the last few weeks and could be factoring in the potential takeover.

I see the 900p level as resistance but would want the stock to consolidate first.

Volatility before my entry means I can’t place a tight stop.

And without a tight stop, the position size decreases, affecting the potential reward of the trade.

This is why I prefer tight stops from consolidations.

And if the stock comes out with better than expected trading, it would be a reverse from July’s profit warning and signal to me to go long for an intraday trade - potentially longer.

Just quickly - I introduced the Priority List for the new UK Stock Trader Pro live cohort due to demand.

There are only 100 spots available in the live cohort, and almost 300 people on the wait list.

If you want to make sure you get early access, this short survey gets you on the Priority List.

It’ll tell me what you want from the program and help me to give you what you need to become a profitable trader.

And hit reply if you have any questions!

Speak soon,
Michael

P.S. Here’s the link again to the survey