Johnson Matthey (LON: JMAT) shares are up 11% as an investor discloses a stake JMAT shares could do with a bit of a boost too given the daily lacklustre performance recently. We also, from the fringes of the industry, think that a takeover might be viable, even desirable. Our own experience has been that Johnson Matthey has grown a bit too fat and happy over the years. Our best guess (and we know people involved) at the battery materials debacle was simply that JMAT was running it as a mature business with a stable market rather than the scrappy start up it needed to be. We are deeply unimpressed with the company’s ability to do new things even as we’re entirely happy to admire the rigour with which it does the current things.
We’d also suggest that there’s a problem coming down the pike with the move to EVs. A nice part of the Matthey business is the reprocessing of catalytic convertors for the platinum group metals contained. This is, of course, a market that is going to disappear as EVs don’t use them. It’ll take a decade or two, sure, but when allied with our beliefs about their ability to do new things perhaps not so good.
As we say, we do admire that rigour. Pratt & Whitney just had huge problems with metal powders in their jet engines. Johnson Matthey provides powders of this sort to jet engine manufacturers - but the problems here were not to do with JM supply. Not because JM dodged a claim, but because they don;t make those sorts of mistakes. #
Johnson Matthey share price from Google Finance
The announcement today is of stake building: “Shares in Johnson Matthey jumped almost 13 per cent on Friday after the investment arm of New York-based industrial firm Standard Industries nearly doubled its stake in the British chemicals maker to 10 per cent, making it the largest shareholder. Standard Latitude Master Fund had taken a 5.2 per cent stake in Johnson Matthey in April last year and spurred speculation that it could lead to a possible takeover.” Details are here.
What’s worth noting is that the position is in derivatives, not the stock itself. This imposes a carrying cost so it’s not something done for long term positions. Or not usually perhaps, building a derivatives position is more often a prelude to doing something rather than just a passive holding.
Now, of course, whether a takeover is going to happen is another thing. But the odds of one have certainly just risen.
