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Dairy producer A2 Milk Company Ltd (ASX: A2M) has been a thorn in many investors’ portfolios this year, but November was particularly bad.

Last month the share price shed a painful 5.28%. Ironically, it was action from its own angry shareholders that pummelled the stock further.

On 24 November, Shine Lawyers revealed it was pursuing a class action on behalf of aggrieved investors who claim they were misled and deceived.

The group alleged that the New Zealand company breached its disclosure obligations by not updating the market earlier last year about its COVID-19 pandemic woes.

This was the second class action filed against A2 Milk, with Slater & Gordon launching a similar case in October.

What’s the disagreement?

The centrepiece of the argument from the class actions is the financial update given on 19 August 2020. 

“A2 Milk was, or ought to have been, aware that their FY21 guidance, and subsequent representations, did not adequately take into account a number of factors known to A2 Milk,” stated Shine Lawyers.

“[This] ultimately impacted the company’s financial performance, resulting in a 62% drop in market value in FY21.”

That August 2020 update was when the company first revealed the damage that border closures had on its daigou (expatriate) sales channel into China.

Subsequent updates didn’t help either, with A2 Milk shares falling 52.7% over this calendar year.

From scraping the $20 threshold in July 2020, the stock has since sunk more than 70% to trade for $5.50 on Monday afternoon.

Are A2 Milk shares a bargain now?

As for the future of A2 Milk, the professionals are absolutely divided on where it will head.

Among 15 analysts surveyed by CMC Markets, 5 of them rate the stock as a buy and 4 rate it as a sell. The remaining 6 think it’s a hold.

Tribeca Investment portfolio manager Jun Bei Liu revealed last month that her team has been buying.

“We’re seeing the share price reflect the bottom… the worst conditions you can expect. It’s only going to get better from here,” she said.

“We think it would deliver a very good return… Nothing’s really changed about this company over the long run.”

While the Chinese business is still down, according to Liu, the English-language markets were doing fine.

“Don’t need to worry about when the share price will bounce back. Because it will.”

The post How the A2 Milk (ASX:A2M) share price tanked 5% in November appeared first on The Motley Fool Australia.

More reading

• Down 50% in 2021, is the A2 Milk share price a cheap buy?
• Top brokers name 3 ASX shares to buy next week
• Are A2 Milk (ASX:A2M) and this beaten down share bargain buys?
• A2 Milk (ASX:A2M) share price dips on news of a second class action
• What brokers are saying about A2 Milk (ASX:A2M) and Hipages (ASX:HPG)

Motley Fool contributor Tony Yoo owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in AMP Ltd (ASX: AMP) have continued to struggle in recent weeks. Despite a 6% rally in October, the financial services company has weakened throughout November and early December. As a result, the AMP share price is within shooting distance of its 52-week low of 88.5 cents.

At the time of writing, shares in the multibillion-dollar wealth management business are down 1.9% to 93 cents. For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted this afternoon and is currently trading 0.13% higher.

So, what is weighing on the mind of AMP investors lately?

Time to pass around the collection plate

It appears investors of AMP shares have been shaken since 22 November 2021, when the company revealed it would continue as manager of the AMP Capital Wholesale Office Fund (AWOF).

In the same announcement, shareholders were told AMP Limited expected to contribute up to $500 million of capital support for the real estate business ahead of the company’s demerger. Given the company’s falling cash balance, this news wasn’t the best for anyone concerned with AMP’s balance sheet.

Unfortunately, only a few days later, the financial institution revealed a $325 million impairment charge. Detailing the charge, AMP said the charges were mostly non-cash and were a product of its comprehensive balance sheet review.

The impairment charges comprise partial impairment of deferred tax assets and a write-down of intangibles, among other things. Furthermore, the charges are expected to come to a total capital impact of $220 million for FY2021.

Following the update from AMP, analysts at Citi rated AMP shares a “neutral” and retained its price target of $1.25 per share. Importantly, the broker put a question mark over whether the financial services company would have sufficient capital for its infrastructure funds post-merger.

While the company detailed the breakdown of earnings for its emerged AMP Limited and PrivateMarketsCo at its recent investor day, separation of the company’s cash is hazy. Additionally, up to $295 million (post-tax) of demerger and transformation costs are expected in the coming years.

For this reason, Citi analysts are wary of the need for AMP to raise capital.

How have AMP shares performed?

The extensive scale of AMP on the ASX hasn’t prevented it from experiencing a substantial downfall over the years. In the past year, AMP shares have tumbled 46.6% in value. The financial services company maintains a market capitalisation of $3.02 billion in spite of the capital erosion.

A big shakeup for the company is likely to occur in the first half of 2022 if its demerger proceeds. However, the AMP Limited that emerges is hoped to be a simplified Australia and New Zealand retail wealth manager.

The post Own AMP shares? Here’s why the company could be looking to raise capital appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• Are AMP (ASX:AMP) shares priced as though ‘the situation is worse than it is’?
• Top brokers name 3 ASX shares to sell today
• These 3 ASX 200 shares are topping the volume charts on Thursday
• ASX shares to buy for the Omicron COVID outbreak

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Kuniko Ltd (ASX: KNI) share price is treading lower on late Monday afternoon. This comes after the company announced an update on geochemical sampling analysis at its prospective Skuterud Cobalt project in Norway.

At the time of writing, the battery metals explorer’s shares are swapping hands for $1.21, down 1.22%

What were the results?

Investors appear unfazed by the company’s latest release to the ASX, sending the Kuniko share price lower.

In its statement, the company advised it has received the first geochemical soil sample assays from the Skuterud Cobalt Project. The encouraging results indicated a distinctive geochemical vector with arsenic, cobalt, and copper signatures towards the main ‘fahlband’ zone. This is believed to be extended on for at least 12 kilometres in a north-western direction from the Skuterud Mine.

A more detailed assessment of the geological data will be conducted and completed by February 2022. This will allow Kuniko’s technical team to identify drilling targets for the 2022 field season.

Kuniko CEO, Antony Beckmand commented:

The assay results at our Skuterud Cobalt Project offer further support that the anomaly identified by our geophysics program is on point, putting us in a prime position to firm up a drilling program for next year. The investment in the airborne geophysics, combined with the extensive soil sampling campaign, demonstrates that there is significant upside exploration potential, with drilling by pervious explorer Berkut having missed the mark.

These results and the pending assays from our Vangrofta Copper Project enable us to plan an efficient drilling program for next year.

Kuniko share price summary

Since debuting on the ASX boards on 24 August, Kuniko shares have moved in circles. The company’s share price hit an all-time high of $3.60 during the first opening weeks, before gradually treading lower.

Kuniko presides a market capitalisation of roughly $51.01 million, with more than 41.47 million shares outstanding.

The post Kuniko (ASX:KNI) share price heads south as company gears up for drilling appeared first on The Motley Fool Australia.

More reading

• Own AMP shares? Here’s why the company could be looking to raise capital
• Bitcoin (CRYPTO:BTC) price crash dashes crypto’s safe haven status
• Own Woodside (ASX:WPL) shares? Why this expert is watching LNG demand in Asia
• Flight Centre (ASX:FLT) shares have a 13% short interest. What does this mean?
• Why has the Telstra (ASX:TLS) share price had such a lacklustre start to December?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bitcoin (CRYPTO: BTC) price edged lower over the past 24 hours, down 0.5% to US$49,253 (AU$70,741).

But the big moves came over the weekend. A crash that’s left the world’s number one crypto by market cap down 15% since this time last week.

So what happened?

Bitcoin fails to live up to haven status…again

As The Motley Fool reported on 29 November, when news of the new Omicron COVID variant broke, most major cryptocurrencies sold off heavily alongside other risk assets.

And Bitcoin was no exception. In the space of a single hour, the price tumbled 9%.

While crypto enthusiasts have long spruiked the token as ‘digital gold’, meaning it can act as a haven in times of market turmoil, recent events haven’t seen it live up to that billing.

On Saturday, global markets and particularly risk assets in the tech space, again came under pressure, this time due to US jobs data and interest rate concerns.

The Bitcoin price fell hard too, going from more than US$56,961 to trade below US$46,882, according to data from CoinMarketCap.

As for gold, the yellow metal hasn’t exactly shot the lights out. But bullion is trading almost exactly where it was on Saturday, at US$1,784 per ounce. Which is what investors are after when they’re seeking so-called haven assets to hedge their portfolios.

What the experts are saying

Bitcoin’s price moves are increasingly correlated to swings in global share markets.

Liz Young, head of investment strategy at SoFi, doesn’t buy into the token offering a low risk investment option.

According to Young (quoted by Bloomberg):

The crypto industry looks at Bitcoin as like this super-low-risk option. And it looks at some of the other coins as the higher risk option. But take a step back, and the rest of us look at Bitcoin as a high-risk option in the broader investment landscape. So it’s all about your perspective and your comfort level.

And Katie Stockton, founder of research firm Fairlead Strategies, said “The decline was likely in part technically-driven, exacerbated by the derivatives market, and not helped by the downside momentum behind high-growth stocks on Friday, to which Bitcoin has been positively correlated,”

So what’s next for Bitcoin?

Addressing this weekend’s price crash and his forecast moving forward, Antoni Trenchev, co-founder of crypto lender Nexo said:

As usual, since crypto traders deploy leverage it results in cascading sell orders and liquidations. We should find support around [US]$40,000 to $42,000 and then rebound in line for a end-year rally. If that does not hold, we might revisit the July lows of $30,000 to $35,000.

Invest with care.

The post Bitcoin (CRYPTO:BTC) price crash dashes crypto’s safe haven status appeared first on The Motley Fool Australia.

More reading

• Could interest-paying crypto accounts be coming to a CBA (ASX:CBA) branch near you?
• Here’s how these 4 top traded cryptos performed in November
• Here’s why Charlie Munger says crypto should have ‘never been invented’
• Why Bitcoin, Ethereum, and Dogecoin are slumping today
• Is Australia on the precipice of mass crypto adoption?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Woodside Petroleum Limited (ASX: WPL) share price is in the green this afternoon even as the S&P/ASX 200 Index (ASX: XJO) is dipping lower.

At time of writing, Woodside shares are up 1.03%, trading at $21.56, while the ASX 200 is down 0.07%.

Why Woodside shares are in the spotlight

Woodside shares have been in the spotlight in recent weeks as the energy giant fights off a last-ditch legal challenge to its $16.5 billion Western Australian Pluto LNG project.

The company forecasts the massive project will provide some 30 years of LNG exports. It expects to complete the development in 2026. Provided, of course, the legal challenge isn’t upheld by the Supreme Court of Western Australia.

Although Woodside has already received the official go-ahead from Western Australian regulators, the Conservation Council of Western Australia (CCW) announced last week it would challenge the works approval for the Pluto Train 2 project.

CCW, represented by the Environmental Defenders Office, believes WA authorities erred in granting permission for the development. Among other things, they say the lifetime greenhouse gas emission – and the impact on national treasures like the Great Barrier Reef – were not properly taken into account.

Why this expert is eyeing LNG demand in Asia

New fossil fuel developments are facing an uphill battle across Australia and much of the developed world.

With nations pledging to reduce their emissions, environmental groups are hoping that if the Pluto 2 Train project does go ahead, it will be the last major project Down Under to do so in Australia. A development that would likely pose significant headwinds for Woodside shares.

However, Curtin University energy economist Roberto F Aguilera, isn’t so sure.

According to Aguilera (quoted by ABC News):

The development of this very large project will secure their ability to provide LNG for decades to come… These are very capital intensive projects so they’re not overly influenced by current events.

[The] long-term strategy will be asking, ‘Will there be long-term demand for LNG, particularly in Asia?’

So can Woodside shareholders expect the company to ditch its LNG plans?

“It’s probably wishful thinking to get out of natural gas because they’ve invested so many billions in this very capital-intensive, long-life infrastructure,” Aguilera said.

More likely, we’ll see Woodside continue to work to reduce the carbon footprint of its LNG operations to address some of the concerns against its current and future developments.

According to Aguilera:

The company will have to make the case that gas and LNG is compatible with a low-carbon future. By using renewables like solar to power the gas developments, like the liquefaction, for example, which is energy intensive … all of this will help them to obtain that social licence to be able to proceed with future gas or LNG projects…

He added:

Maybe two to three years ago gas became deeply unpopular. But longer term, I think it will be realised that achieving climate goals is very, very difficult in the absence of using gas as a transition fuel.

How have Woodside shares been performing?

Woodside shares have slipped 7% so far in 2021, while the ASX 200 is up 8% in that same time.

Over the past month, the Woodside share price is down that same 7%.

The post Own Woodside (ASX:WPL) shares? Why this expert is watching LNG demand in Asia appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Analysts say these are the ASX resources shares to buy now for big returns
• 5 things to watch on the ASX 200 on Friday
• 2 more of Morgans’ best ASX share ideas for December
• 5 things to watch on the ASX 200 on Thursday

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Short interest in Flight Centre Travel Group Ltd (ASX: FLT) shares is at a near all-time high. But what does that mean for the company’s investors?

At the time of writing, the Flight Centre share price is $17.29, 0.23% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.14%.

What does Flight Centre shares’ short interest matter?

According to the most recent data, Flight Centre is still the most shorted share on the ASX.

As of 30 November, 13.49% of the company’s shares are in the hands of short-sellers. That’s compared to the 4.58% that were shorted as of 29 November 2019.

So, what does Flight Centre’s short interest mean for the company’s future? Well, it means some investors expect the stock to tumble in the near-to-medium term.

To simplify short-selling, it’s when someone – dubbed a ‘short-seller’ – borrows shares before immediately selling them.

They then hope the company’s share price goes down so they can buy back the borrowed shares at a lower price and return them to the lender.

If successful, a short-seller will return the shares and take the amount the share price fell as profit.

The percentage of short-seller interest represents how much of a company’s stock is currently being used by short-sellers to do just that.

Thus, the level of short-selling activity in Flight Centre shares means confidence in the company’s share price is low in some circles. This might be a bad sign for long-term investors.

One fundie broke down why they think Flight Centre is a good short pick at Friday’s Sohn Hearts & Minds Conference.

One reason cited was the issuance of $800 million worth of notes as part of an emergency capital raise as COVID-19 rampaged the company.

Another was Flight Centre’s general business model, which the fundie stated might struggle to turn a profit in the future.

If the fundie’s concerns prove valid, it could be dire for the Flight Centre share price.

However, if the travel agency’s share price turns upwards, it will spell bad news for short-sellers, who will be forced to pay back the amount the share price gains.

The post Flight Centre (ASX:FLT) shares have a 13% short interest. What does this mean? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Why has the Webjet (ASX:WEB) share price had such a lousy start to December?
• Winning shares for 2022: the companies experts are backing revealed at Sohn
• Flight Centre (ASX:FLT) share price falls again amid Sohn short pick
• Is the Qantas (ASX:QAN) share price at risk of a capital raise?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price has not had a great start to this last month of 2021. Since the start of December, Telstra shares have fallen from $4.06 each to the current share price of $4.02 today (flat so far from Friday’s close).

To be fair, the S&P/ASX 200 Index (ASX: XJO) hasn’t had a great time of it over December thus far either. The ASX 200 has fallen around 0.9% over the same period. But, Telstra is still lagging the broader market. So what’s going on with this ASX 200 telco lately?

Well, unfortunately for those of you who like definitive answers, there’s not one to give. There has been no major official news out of Telstra for weeks.

Telstra share price has a Santa sag

But Telstra has been the beneficiary of more positive developments lately than negative ones too. The company’s ongoing share buyback program continues to take Telstra shares off the market (benefitting existing shareholders). Just today, Telstra released a disclosure informing investors that it purchased 6.86 million of its own shares last Friday for retirement.

Further, my Fool colleague James covered a recent and optimistic broker recommendation for Telstra. Goldman Sachs now rate Telstra shares with a 12-month share price target of $4.40 – implying a potential future upside of almost 9.5% on today’s pricing.

Goldman also sees Telstra shares paying out an annual dividend of 19 cents per share by FY2025, up from FY2021’s 16 cents per share in total dividends.

So it’s unclear what has dented investors’ confidence in Telstra shares over December thus far. Perhaps the telco has just been caught up in the market gyrations we have seen in recent weeks. Or perhaps, since the Telstra share price is still up 33.55% year to date in 2021 so far, investors are giving it a breather.

Whatever the reason for the most recent malaise, Telstra shares are still pretty close to their 52-week high of $4.09 a share even at today’s pricing.

At the current Telstra share price, the ASX 200 telco has a market capitalisation of $47.54 billion, with a price-to-earnings (P/E) ratio of 25.74 and a dividend yield of 3.99%. 

The post Why has the Telstra (ASX:TLS) share price had such a lacklustre start to December? appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Monday
• Hold the phone! Why Telstra (ASX:TLS) could be a dividend share to buy
• These 3 ASX 200 shares are topping the volume charts this Friday
• The Telstra (ASX:TLS) share price keeps rising. What happened in November?
• These 3 ASX 200 shares are topping the volume charts on Thursday

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Venture Minerals Limited (ASX: VMS) share price is soaring today, up almost 10% at the time of writing. This follows a positive update from the explorer on its joint venture with Chalice Mining Ltd (ASX: CHN).  

The Venture Minerals Share price is currently swapping hands at 4.5 cents apiece, up 9.76%. Let’s take a look at the latest exploration announcement from Venture.

What did Venture announce today?

In today’s release, Venture advised that its joint venture partner Chalice Mining has spent $300,000 on the South West Nickel-Copper-Platinum Group Elements Project in Western Australia.

This marks the completion of the first stage of the joint venture between the two companies.

Under the terms of the agreement, Chalice can earn up to 70% if it spends $3.7 million exploring the targets over a 4-year period. The project is located 240km south of Perth in the Balingup Metamorphic Belt.

Venture stated that said most of the exploration was at its 20km long Thor target, a “Julimar lookalike magnetic anomaly interpreted to be mafic-ultramafic intrusive complex”.

What did management say?

Venture managing director Andrew Radonjic said with the completion of the detailed EM survey, the company was eagerly awaiting the survey results:

The knowledge gained from Chalice’s Julimar discoveries will be a huge advantage in determining which conductors should be drilled first and this no doubt increases the probability of bringing a discovery forward.

This is the main reason why Venture decided to partner with Chalice on this project as it clearly increases the chances of success which benefits all of the company’s shareholders.

Venture share price snap shot

The Venture share price is up 12.82% over the past 12 months, although Venture shares have dropped 10% since January this year. Shares in the mineral exploration company reached a high of 15.5 cents on 15 June.

At today’s share price, Venture has a market capitalisation of roughly $63.8 million.

The post The Venture Minerals (ASX:VMS) share price is venturing 10% higher today appeared first on The Motley Fool Australia.

More reading

• Why API, Chalice Mining, GUD, and Worley shares are charging higher
• Here’s why the Chalice Mining (ASX:CHN) share price is glowing today
• These were the 5 best performing ASX shares in November
• Why Chalice Mining, CBA, Nufarm, and SEEK shares are sinking
• Here are the top 10 ASX shares today

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is yet again kicking off the trading week on the wrong side of the bed this Monday. At the time of writing, the ASX 200 is down 0.15% at 7,230 points.

But rather than letting that get us down, let’s instead check out the ASX 200 shares currently topping the ASX trading volume charts, according to investing.com.

3 most active ASX 200 shares by volume this Monday

Pilbara Minerals Ltd (ASX: PLS)

Our first share topping the trading volume charts so far today is the ASX 200 lithium producer Pilbara Minerals. Pilbara has seen a sizeable 15.06 million of its shares swap hands thus far today. There have been no major news or announcements out of Pilbara this Monday.

However, the Pilbara share price itself hasn’t taken well to the market’s falls today. Pilbara shares are currently down a nasty 5.3% at $2.32 at the time of writing. This steep drop is the likely culprit behind this elevated trading volume.

Telstra Corporation Ltd (ASX: TLS)

Telstra is our next share to take a gander at today. This ASX 200 telco giant has had a hefty 16.7 million of its shares swap hands on the markets so far. Again, there is not much in the way of official news or announcements out of Telstra.

Additionally, Telstra shares are currently flat at $4.02 a share today after dipping to $3.99 earlier this morning. It’s likely that the combination of Telstra’s ongoing share buyback program, in addition to the share price dips this morning, are what’s behind this elevated trading volume.

Challenger Ltd (ASX: CGF)

ASX 200 annuities provider Challenger is our final and most traded ASX share this Monday. As it stands thus far, an impressive 21.5 million challenger shares have found new owners on the markets. This could be a consequence of the ASX announcement Challenger put out to investors this morning. This informed the markets that Apollo Global Management has received Australian Prudential Regulation Authority (APRA) approval to acquire the remaining 3% of Challenger that it was entitled to as part of an earlier agreement. 

Apollo now owns a full 15% stake in the company. The Challenger share price initially spiked on market open this morning, going as high as $6.68 a share. However, subsequently, sentiment has cooled off, and Challenger shares are now flat at $6.51. It’s this combination that has probably resulted in this company topping the volume charts so far this Monday.

The post These 3 ASX 200 shares are topping the volume charts on Monday appeared first on The Motley Fool Australia.

More reading

• What do Wesfarmers (ASX:WES) and Amazon.com have in common?
• Why ANZ Bank (ASX:ANZ) is losing market share to other big ASX banks
• ASX 200 (ASX:XJO) midday update: Metcash jumps, Kogan and Zip sink
• Boral (ASX:BLD) share price jumps on $1bn fly ash sale
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Challenger Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Santos Ltd (ASX: STO) share price is on the rise during Monday afternoon trade. This comes after its peer Oil Search Ltd (ASX: OSH) provided an update on the planned merger for both companies.

At the time of writing, the energy producer’s shares are up 1.34% to $6.45 apiece.

What’s driving Santos shares higher?

Investors are pushing Santos shares upwards despite the broader S&P/ASX 200 Index (ASX: XJO) sell-off today.

Earlier this morning, Santos released Oil Search’s announcement to the ASX, highlighting progress with the merger.

Oil Search declared that the Papua New Guinea Securities Commission has given its approval for both companies to amalgamate.

Although positive, this is just one of many conditions required for the merger to proceed.

Other clauses within the merger implementation deed relate to clearance from the Independent Consumer and Competition Commission of Papua New Guinea, as well as approval by Oil Search shareholders at the scheme meeting to be held tomorrow.

If all goes according to plan, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held. This would give Oil Search shareholders a 38.5% stake in the newly merged entity. Santos shareholders would retain the remaining 61.5% interest.

The group is aiming to become the ASX’s largest oil and gas company and a top 20 global player. This would give the super-company a diversified portfolio of long-life and low-cost assets with significant growth options.

Another reason Santos shares are moving higher is the rising price of the West Texas Intermediate (WTI). From 1 December, the WTI has surged from trading around US$65.57 per barrel to now US$67.84 per barrel. This represents an increase of about 3.4% over the past few days.

What do the brokers think?

A number of brokers have weighed in on the Santos share price last month following its merger update.

Swiss investment firm UBS raised its price target by 12% to $9.60 for Santos shares, while JP Morgan cut its outlook. The multinational bank reduced its rating by 1.3% to $7.90 per share.

In regard to both brokers’ assessments on the current Santos share price, this implies an upside of around 49% and 23%, respectively.

About the Santos share price

It’s been a disappointing 12 months for Santos shares, moving in circles to register almost flat for the period. It’s worth noting that the company’s share price is nearing its 52-week low of $5.84 seen in mid-August.

Based on today’s price, Santos commands a market capitalisation of roughly $13.4 billion, and has approximately 2.08 billion shares outstanding.

The post Why is the Santos (ASX:STO) share price climbing today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• These 3 ASX 200 shares are topping the volume charts this Wednesday
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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