Paul Mampilly is a renowned American investor, Profits Unlimited Founder and former hedge fund manager. With over 25 years in the investment industry, Paul Mampilly has a lot of investment insights he can share. In an article published in Banyan Hill, he talks about how investing in mergers and acquisitions can have huge returns.According to Paul Mampilly, patience is a virtue he learned from his grandfather. Markets can be hard to predict, but if you have the patience to ride with it through the ups and downs, you will be better placed. The importance of research was also brought to his attention by his grandfather. Paul Mampilly believes that you must seek to know how a company is doing, especially if you are looking to invest in stock. You should be able to tell how the company is going to do in the future.You can profit from a company that is being acquired even if you don’t work for the company.
Huge markups to allow for huge profits
There is a potentially huge profits to be earned just before a company is acquired. For instance, you can earn huge profits from buying a stock right before a company is bought by a huge company.Essentially, according to Paul Mampilly, the target companies here are small companies with low debts and huge cash in-flow. Therefore, the company can sell, say, a new technology with a huge mark up to allow for huge profits which are transferred to shareholders.
The opportunities are available all over the world
There have been a lot of M&As in the past few years. In 2017 alone, there were over 50,000 deals across the world, of which 25% took place in US. The US market has registered huge M&A deals such as Disney acquiring part of Twenty-First Century Fox, although the deal is not yet complete.Paul points out the oil sector as the one seeing a lot of mergers and acquisitions. Smaller companies made huge strides in the sector and are earning a lot of money. This will drive up the need for huge companies to acquire them in order to expand their own production.
Rapidly growing economies
A lot of deals have been done in the US through August, amounting to more than $120 billion. Outside the USA, the M&A India market is full of opportunities today. There a lot of companies are looking to invest in India, since it’s a quickly growing economy.