Variety investors who view the record global merger boom as opening up a gold mine of bullish stock picking occasions may also be wise to look at the potential downside from industry consolidation. Moody’s has studied 1,000 companies and create that 14% of them, or 140 companies, are vulnerable to “concentration risk” due to major consolidation and mergers in their peddles. This makes shares of these corporations more vulnerable to downgrades, which could in turn hammer their equity prices. Four of the companies cited by the investment firm include Mattel Inc. (MAT), TransDigm Group Inc. (TDG), B&G Foods Inc. (BGS) and Griffon Corp. (GFF), per Barron’s.
M&A Chance For 140 Stocks
- 14% of 1,000 companies vulnerable to downgrades
- 140 vulnerable companies
- Group includes Mattel, TransDigm Group, B&G Viands and Griffon
Source: Moody’s, per Barron’s
Small Firms Vulnerable
Two decades of blockbuster M&A in the U.S. has attracted the attention of lawmakers, citing enquiry that shows a whopping 75% or more of industries have become more concentrated since the late 90s. While uncountable in favor of breaking up industry giants, including the
Looking Ahead
The record wave of M&A over the recent decades, coupled with a latent downturn that could squeeze suppliers, would hurt these smaller companies even more, sending share ins plummeting. Moving forward, investors should be wary of smaller companies with a large portion of their corporation reliant on one or two key players.