an interesting conundrum

I wish that this particular thought process was mine alone but it was thrown up in a conversation this morning. There are 2 parts to it: #1 The higher that a stock moves the more the need for various funds to reduce their position to keep their portfolios balanced. Therefore, it is quite possible that those holders who have been in this stock since Moses was a child currently need to reduce their holdings to keep their bosses happy. #2 follows on from #1 - the higher that the stock moves the greater the need for Xstrata to get off of it's backside and tidy things up. So, the higher the price moves the less control Xstrata have. So we have a "push me pull you" (courtesy of Dr Doolittle) situation. New money moving into the stock increases the likelihood of a full takeover whilst balanced managers doing their "thing" almost plays into Xstrata's hands!
Another point which should be looked at is the Cu Industry's internal long term price assumptions. Assuming that Xstrata really does want to take over Anglo then it is imperative for them to make themselves look to have a stronger balance sheet than they currently have. Here is a suggestion - What if they went out into the market and started talking up their Cu prospects (say long term pricing of $2.50Lb). This would allow them to claim greater value of their existing Cu portfolio and thus claim stronger balance sheet strength. Their problem then is one of buying assets at cheap levels if the whole mkt then starts using their numbers. Simple solution is to buy first and upgrade second.