Three Less Obvious Opportunities In Response To Brexit
43 years since joining the European Community in 1973, what would later become the European Union, the voters in the United Kingdom have finally voted to leave. Plenty has been written about where the obvious opportunities lay, both long and short, and this only two trading days after the event. There are many less obvious Brexit plays as well where traders can take advantage of market imbalances. Here are three potential good ones.
Carrefour SA (OTCMKTS: CRERF)
This is a French company, listed domestically on the Euronext Paris but also available over the counter in the US. Supermarket chains inside the UK have suffered on the vote, and many suffered heading into the leave campaign win, based on the fact that their produce imports could become more expensive. Tesco Corporation (USA)(NASDAQ:TESO) and Wal-Mart Stores, Inc.(NYSE:WMT), the latter of which operates the Asda chain in the UK and the nation’s second largest supermarket chain, are prime examples of this.
Carrefour, on the other hand, has no operational activity in the UK, and as such, generates no sterling revenues. If anything, it will make the UK produce that is sold in the brand’s European supermarkets cheaper to import – things like wine, cheese and meats – which should have a positive impact on the chain’s bottom line. Despite this seeming lack of negative exposure, Carrefour is down nearly 9% post Brexit. This exposure is an opportunity to buy into what looks to be a unjustified, yet collateral sell off in the produce retail sector.
Oracle Corporation (NYSE: ORCL)
Falling markets means lower valuations, and lower valuations means opportunities for companies with large cash holdings to buy out prospects and competitors at a discount rate. Oracle is a candidate for this. The tech sector looks to be picking up its acquisition activity with Microsoft Corp. (NASDAQ:MSFT) and LinkedIn Corp (NYSE:LNKD) headlining the trend, and Oracle now has the opportunity to join this trend cheaply. The company has a large UK presence, it knows the UK market well, and holds a little over $60 billion in cash, more than 85% of which is held overseas.
NCC Group PLC
One of the major areas of restructure facing the UK as it distances itself from the EU is cybersecurity. The framework under which the majority of UK cybersecurity falls at present is European law-based, and this will have to change. Security experts largely agree that the changing of this framework, even if the end product is a stronger one, presents a huge opportunity for cyber criminals because change breeds uncertainty and with uncertainty comes the potential for loopholes, mistakes, etc. There’s going to be a big trend towards UK security companies, as non-tech companies look to outsource their protective requirements to companies that are the most familiar with the space, and are at the cutting edge of the changing requirements. NCC is a huge player here, and should see plenty of activity on the back of Brexit while it brings the nation’s businesses and individuals in line with the revised, British-laid requirements.