Rabu, 04 Juli 2012

MARKET REPORT: Man Group falls amid profit warning rumours

MARKET REPORT: Man Group falls amid profit warning rumours

By Geoff Foster

PUBLISHED: 16:23 EST, 4 July 2012 | UPDATED: 16:23 EST, 4 July 2012

All is not well at Man Group. At least that’s what hungry bears were told yesterday as they clawed big lumps out of the hedge fund giant’s share price.

They sold the shares down to 66.4p before they closed 3.3p cheaper at a 52-week low of 67.55p amid rumours that a profits warning could be on the agenda.

The shares have plummeted more than 70 per cent over the past year, bringing about its relegation from the Footsie.

MARKET REPORT: Man Group falls amid profit warning rumours


Coinciding with JP Morgan Cazenove’s downgrade to neutral and decision to slash its target price to 45p from £1, dealers heard whispers that Man’s flagship AHL fund, which contributes 70-80 per cent of group earnings, has continued to underperform. The total of assets under management have slipped further down the table.

Should the City have to digest yet further bad news from Man Group, dealers reckon that embattled chief executive Peter Clarke will have to walk the plank. Finance Director Kevin Hays was recently replaced by Jonathan Sorrell, son of WPP’s boss Martin Sorrell.

One fund manager said: ‘I wouldn’t touch Man Group with a bargepole until its misfiring fund AHL starts to perform. Having said that, the shares are now at such a depressed level that a US bidder could come calling.’

Sellers continued to rain on Halfords’ parade as continuing talk that a profits warning will accompany first-quarter figures on July 19 left the bikes-to-car accessories group a further 20.4p off at a 52-week low of 208p.

Analyst Kate Calvert at Seymour Pierce cut her target price to 220p from 270p. She expects UK retail like-for-like sales in the first-quarter to be down 6pc as a result of competitor discounting and the persistent wet weather. She has slashed her 2013 full-year pre-tax profit forecast by 15 per cent to £70million and 2014’s by 18 per cent to £71.3million. Shareholders will be relieved to hear that she expects the dividend will be maintained.

With Wall Street closed for Independence Day, the Footsie bided its time ahead of today’s expected move by the Bank of England to boost its quantitative easing programme by £50billion to £375billion. All eyes for long periods were on former Barclays boss Bob Diamond’s performance in front of the Treasury Select Committee. The FTSE 250 lost 28.6 points to 11,161.21.

Miner Xstrata touched 833p and closed 14.4p higher at 820.8p following a hefty turnover fuelled by expectations that Glencore International, 8.3p better at 312.05p, will soon increase its offered merger ratio of 2.8 of its own shares to at least three for each Xstrata share.

Not put off by the Invensys board’s statement earlier this week that it is not in any takeover talks, punters chased the engineering group up a further 4.1p to 235p. Emerson Electric of the US walked away from a tentative approach last month but speculation persists that China South Locomotive is planning to make a move.

Insurer Phoenix also reflected revived takeover hopes with a gain of 13.4p to 489.3p. The group ended bid talks with CVC Partners in February and dealers now hear other private equity players are sniffing around.

Selling ahead of today’s investor day for analysts dragged Aviva 5.5p down at 281.4p. Oriel Securities believes the shares are unlikely to perform with leadership and management unclear, and with issues including  the eurozone and Solvency II hanging over them.

Public to private merger and acquisition activity is on the ascendancy. British TV producer Boomerang Plus soared 23.5p to 74.5p in response to a cash offer worth £7.1million or 77p a share from Boom Pictures, a new company backed by Boomerang managers including co-founder, chief executive and 26 per cent shareholder Huw Eurig Davies. Judith Mackenzies’ Downing fund made a nice turn on its 12.8 per cent shareholding.

Loudwater Trust jumped 28.5p to 55p after announcing the sale of its stake in AgraQuest to Bayer AG for £27.3m cash or 45.4p a share. This compares with end-March carrying value of the stake of £6.8million or 11.3p a share and an investment cost of £4.8million.

Bank note printer De La Rue fell 48.5p to 974.5p on rumours of a pending broker downgrade.

Uranium play Forte Energy edged up 0.09p to 1.3p following a positive set of drilling results from its Bohoduo uranium exploration project in Guinea, West Africa.

AIM-listed International Mining and Infrastructure Corporation rose 4.25p to 29.25p on hearing it has teamed up with China Railway Materials, a Chinese state-owned business that serves the steel supply chain and is one of the top three importers of iron ore in China.

- Emerging African phosphate rare earth producer and explorer Galileo Resources closed flat at 42.5p but is one to watch. It has announced a share exchange agreement at 40p a share with prospective AIM quoted natural resources company Praetorian Resources. Earnings enhancing deals are said to be in the pipeline which should lead to a re-rating.

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