Efficient Market Theory Poof!
Something that puzzles me a lot is the valuation of some large cap stocks. We all heard of the efficient market theory but I'm thinking of stocks like BP, Vodafone, even the latest Royal Mail IPO or Tesla and Facebook. Take Vodafone. They just sold Verizon Wireless to Verizon for U$130bn, and yesterday has a market cap of U$170bn. It seems badly priced. Worse if you think 3 months ago when it's market cap was U$140bn (U$10bn for their non-US, global, operations and assets, including a UK 3G license they paid U$10bn for and cash - granted they have GBP40bn in debt)!! Now AT&T wants to buy up Vodafone, sending shares even higher. I mean who wouldn't at this silly valuation? Can it be true that this Verizon deal that has been on the cards for the last 10 years could lead to their top shareholder, Neil Woodford, the best rate fund manager in UK with the largest fund in the UK to dump all his Vodafone shares (that he held more the donkey year...