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A while back I wrote about how shareholders were at risk of management selling them up the river with dilutive converts and the like.
But if a someone buys all the shares in a takeover they don’t have that risk.
Therefore, I concluded, equities would get cheap enough for a massive round of takeovers.
Now a different risk has presented itself. Seems when the Fed or the Treasury decides to step in and help they take 79.9% of the equity.
So when the stock of a too-big-to-fail prospect starts going down, the incentives are in place for it going down further/faster as the risk of government intervention increases.
Lower prices make takeovers even more attractive.
Once they get going, look for record takeover volume.