Appetite for hedge funds boosts market leader Man Group

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The Independent Online

Shares in Man Group, the hedge fund manager, jumped yesterday after new research suggested it was winning market share in the booming "fund of funds" market.

A study by Morgan Stanley suggested that funds of funds are the preferred way for new investors - both high net worth individuals and first time institutional investors - to get exposure to hedge funds, and as such are driving the current growth of the industry. The broker also believes that April-June was a record quarter for inflows into hedge funds.

Man shares rose 17p to 1,227p because the Morgan Stanley research found that the company has 7 per cent of the fund of funds market, making it the biggest player.

Stanley Fink, chief executive, has cast himself as an apostle of the benefits of hedge funds for diversifying an investment portfolio. Demand for the shares has pushed Man Group into the FTSE 100 with a stock price up more than 200 per cent since the start of the decade.

Dealers focused on individual company stories yesterday rather than the wider direction of the market, which drifted higher, then lower, and then settled with the FTSE 100 at 4,198, off 8.4 points. Even better than expected economic data in the US didn't seem to register and Wall Street was in fact sharply lower during the last hours of London trading.

With so many corporate results out yesterday, speculative investors were kept busy trying to identify other companies that may be victims or winners as a result of the trends identified in results statements. Hilton, which was disappointingly vague on the timing and speed of a recovery in its hotels business, saw its shares fall 4p to 198p. So InterContinental Hotels was weak too, falling 28p to 996p, while Whitbread, owner of Marriott hotels, was off 12p to 744p. Similarly, the WH Smith profit warning, which took its shares down 25.75p to 351.25p, was taken as a sign of dismal news to come from Woolworths. Both companies are expected to continue to lose market share in music and video sales to the supermarkets, such as Tesco (unmoved at 213p). Woolworths shares were down a ha'penny at 38.75p as Investec joined the list of brokers telling clients to cut their holdings.

Brokers were left scratching their heads over the fall by shares of both iSoft and Torex, the hospital software groups which are hoping to merge. The stocks have had a strong run in recent weeks but took a tumble in the last couple of hours of trading yesterday: iSoft was off 25p to 365p and Torex - which now provides a cheap way of buying iSoft shares if you believe the deal will go ahead - was off 36.5p at 607.5p. The planned all-share deal has been sent to the Office of Fair Trading for approval.

There was strong buying of Chrysalis, the media group, after analysts at UBS went in to the company for a chat and emerged to write a relatively upbeat investment note on the company. In particular, UBS told clients Chrysalis radio stations continue to trade strongly, boosting hopes the group can meet profit forecasts for the financial year just ending. Chrysalis shares were up 11.5p to 200p, making them the best performing mid-cap stock.

Rexam, the world's largest manufacturer of aluminium cans, was down 9.75p at 411.5p, its interim results overshadowed by a report that it could emerge as a white knight bidder for Pechiney of France.

The recent surge in British Energy shares continued, with the nuclear generator up another 0.75p to 6.75p on hopes that the refinancing due next month may leave a little more than feared for shareholders, once creditors have been satisfied. The latest rise came even though British Energy admitted its market value had fallen below the level allowed for companies traded on the New York Stock Exchange and it was having to talk to the exchange about the future of its US shares.

There was a new arrival on AIM, as Corpora floated with a placing that raised £1.1m. The software group's Jump! product is an "in-document navigation tool" which enables users to jump around within and between documents to information that matters to them. Placed at 25p, market-makers had the shares at a mid-price of 35p at the end of the day.

The day-traders were out in force for Axis-Shield, up 3p to 189p, on talk of new orders for its diabetes testing product. Transense was up 8p to 55p on talk of a deal with Michelin on its tyre pressure measure. And Toad, which replaces stolen car radios on behalf of insurance companies, was up 2.75p to 23.75p after raising £720,000 in a placing to pay off some debt.

Bid speculation returned to pep up Austin Reed, the clothing retailer. The spring collection of potential bidders included the family of the property developer David Rowland, Nigel Robertson, the great grandson of the founder of Austin Reed, Slater Menswear and the Joe Bloggs jeans entrepreneur Shami Ahmed. Investors are hoping for a similarly colourful autumn collection. Austin Reed shares were up 3p to 150.5p.