In a fairly quiet news flow day today we have had some acquisition, disposal and directors dealing news from a few stocks I have written on in the past. Firstly there is another acquisition and associated rights issue from RPC Group the £2bn rigid plastic container manufacturer which wrote up in detail some time ago and updated on it here.

This latest in a long line of deals from them, which have historically been successful, again looks sensible and given the price, expected synergies of €15m per annum and the financing arrangements looks as though it will be earnings enhancing, like previous deals.

They are paying £470m for GCS Group which is a leading global manufacturer and provider of closures and dispensing systems for consumer products in more than 100 countries worldwide. They are funding this with a mix of cash from a 1 for 5 rights issue at a discounted 460p and debt which is expected to leave their debt at a highish but manageable 2x EBITDA.

In summary on the benefits of the deal they say it will see:

• Further strengthening of European market position
• Strengthening of selected market positions in core European end-markets
• Reinforces presence outside of Europe
• Higher operating margins through procurement synergies
• Adding niche technologies
• Enhancing scale in polymer buying
  

As with previous deals this looks another good one and the associated right issue may also provide another buying opportunity as it did earlier this year at 500p. So I would look out for that given the shares have done well post their recent results and before that and therefore currently stand at record all time highs, where they look over bought and sell on a fullish looking 15 to 16x or so with a 2.3 to 2.5% yield. The management also agreed by using it as an opportunity to launch a rights issue.

Meanwhile we had a disposal of the national network assets from KCOM the Hull based telecom operator. This has raised £90m for them and pays down most of their debt. I estimate this will be roughly neutral as the £4m net cost of using the network going forward will roughly match the interest cost savings. However as they say it does give them capacity to accelerate investment in their plans to transform the group, without the need for any material increase in debt, while at the same time as providing shareholders with a clear medium term dividend commitment.

The shares had been suspiciously firm in the run up to this and have now moved to the top of their trading range over the last few years where they now also appear over bought in the short term. Thus it will be interesting to see if this deal and perhaps details of their

investment plans can prompt a further re-rating, although I note this is very much like a sale and leaseback deal that a retailer could undertake and as I don't see it enhancing earnings I'm not sure it really changes the story that dramatically. Thus given it is on a fairish looking 14x with limited growth and a low EBIT /EV yield the main attraction remains the 6% or so yield which has been growing strongly but is scheduled to be at least maintained at 6p after the current year as indicated by the Company in their interims recently,

So on that basis I would be tempted to suggest locking in some profits up here, although maybe I could be missing something here. But worth noting if you are in need of income the shares are due to go XD the 1.97p interim on 24th December.

Finally further to the bullish update from S&U which I mentioned on Friday. I note that the Chairman Anthony Coombs backed up his bullish comments with a purchase on Friday of 1,000 S&U Ordinary Shares at £24.05 per share which takes his total beneficial holding to 1,335,027 Ordinary Shares representing 11.2% of the total voting rights of the Company.

The names are respectively IG Group (IGG), which had a Pre Close update, Aberdeen Asset Management (ADN) who announced their finals and Kingston Communications (KCOM) with interims. So I'll have a quick look at those in today's post.

First a quick update on Kingston Communications (KCOM) which I highlighted back in January this year as offering value and at that time I suggested that they could perhaps return to around 100p from the 80p level they were trading at around the time. I updated on this after the final results earlier this month when they reported a further 10% dividend increase and  I concluded that there didn't seem to be enough in these numbers to me to justify it breaking our from its range at this time.

I note that in the last week it has hit my 100p target, although it has just nosed above that briefly in the past. I note also that forecasts for the dividend to March 2017 are now out and these show the slow down I expected to around 2% or so. The yield of around 6% should still support them up here, but I'm not sure they will re-rate much more for now. Thus with the shares due to go XD the final dividend of 3.58p this Thursday, I suspect this may help to maintain the resistance at the 100p level for now.

So if you are not bothered about income, now might be a good point to lock in a decent 25% or so capital gain in the space of 6 months against a market that has been flat. Otherwise it seems like a solid hold for the 6% yield, but I wouldn't expect much more from it in capital terms for now though.

The second 6% or so yield stock today is one I mentioned briefly back in early November 2014 as a way of playing a recovery in the Japanese market by investing in a fund manager that was big in Japan. While the idea was a reasonable one as the Japanese market has gone up by around 20% since then, sadly Polar Capital (POLR) the suggested stock has lagged this. In my defence though at least the Sterling Hedged I-Shares MSCI Japan GBP Hedged UCITS ETF I also suggested as a purer way of playing it has outperformed.

Polars under performance was due to the fact that their Japanese fund suffered a poor performance run and saw large outflows and consequently in today's results they suffered their first outflow of funds since the financial crisis. Despite this they did maintain the level of the full year dividend payment as they are confident about their business going forward having added a few new teams and product areas to diversify the business. They look OK value on around 16x with a near 6% forecast yield for the current year, but their larger more established competitors like Jupiter and Aberdeen look more attractive on the Compound Income Scores right now.

Thus again it is probably one that is supported by the yield, but will need the underlying business to improve to move it on in price terms. They seem optimistic on this front and the Chairman's outlook statement in today's results is worth reading as it includes sensible comments such as:

"Markets are by no means cheap and are susceptible to a meaningful correction if central banks cannot manage to deflate at a measured rate the various bond market bubbles they have created in Western economies. Overall debt levels remain uncomfortably high in too many countries although there has been notable progress in some such as the US."

In conclusion, probably not one to chase after the recent share price move and on the back of these slightly disappointing results. However, if you are sanguine on markets medium term and Polars ability to continue outperforming and attracting assets then this could be one to consider on weakness as they seem to be finding good support between 360p and 400p.
Finally, if Greece manage to pull off another great escape (for now) from default then I guess markets could have a relief rally too in the short term.