Market Report: Bear raiders make profits on Proteome Science

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The Independent Online

Bear raiders moved in on the biotech group Proteome Science yesterday and, given the stock's dramatic 19 per cent slide, they look to have made a packet. The raiders are believed to have noticed some time ago that there were a large number of private investors holding the stock via contracts for difference.

Bear raiders moved in on the biotech group Proteome Science yesterday and, given the stock's dramatic 19 per cent slide, they look to have made a packet. The raiders are believed to have noticed some time ago that there were a large number of private investors holding the stock via contracts for difference.

These allow investors to gain exposure to, say, £100,000 worth of shares in Proteome, but only put up a fraction of the money in hard cash. This means that private punters can turn a relatively small amount of money into a lot more. But it also means that when a position goes the wrong way for an investor he can quickly find himself nursing a large loss and being urged by the broker offering him the contract for difference to close his position and sell out.

This is what many private punters were forced to do yesterday as bear raiders pushed Proteome shares lower. And the further they fell, the more punters were forced to close their positions, which in turn pushed the group's shares even lower. They ended the day 21p lower at 88.5p.

Proteome's stock has halved over the past month but market professionals believe it is unlikely to fall any further, noting that nothing has fundamentally changed at the group during this period. Among them was Evolution Beeson Gregory. The broker reiterated its "buy" rating on Proteome and tipped newsflow from the company in the near future to help rally its shares.

In the FTSE 100, GlaxoSmithKline jumped 33p to 1,157p after reassuring first-quarter figures from the drugs giant. Abbey National put on 9.5p to 432p as bid rumours continued to circle the mortgage bank. Unilever rallied 8.5p to 535.5p, making up some of Wednesday's losses. Despite the rise, ABN Amro was heard warning investors that the group is unlikely to witness improving sales until the third quarter. The FTSE 100 index fell 5 points to 4,519.5.

The mining sector had yet another poor session. Anglo American fell 10p to 1,163p, Lonmin lost 29p to 995p and Xstrata dropped 18p to 642p after an uninspiring first-quarter production report from the copper mining giant Antofagasta, off 33p at 953p. Worries about a weakening Chinese economy also weighed on the sector. Booming commodities demand from China has been behind the stellar profits achieved by mining groups in recent years and a warning by the country's premier, Wen Jiabao, that action may be required to cool the Chinese economy unsettled London investors.

Aggreko, off 1.5p to 155p, saw a plethora of its directors pile into the stock. Leading the way were Rupert Soames, the group's chief executive, who picked up 46,000 shares at 159p, and Angus Cockburn, its finance director, who acquired 25,000 at the same price. Chorion put on 1p to 206.5p despite vague rumours of a fund raising from the intellectual property group.

Signet fell 1p to 117.5p as investors locked in profits from the stock's recent strength. Deutsche Bank urged investors to stick with the jewellery retailer despite the strong performance of the shares over the past few months. "At current levels it is tempting to say take profits. We believe this would be a mistake because there is new evidence on the strength of US jewellery sales and because the US dollar has finally started to move favourably for the company," the German broker argued.

Deutsche also talked of exciting opportunities for Signet and raised its earnings forecasts and price target from 120p to 135p. It did, however, warn that if the US dollar started to fall again, Signet would suffer.

Lower down the pecking order, Leeds Group jumped 5p to 24p after the leasing company announced it had entered into takeover talks. In addition, Leeds said it was considering selling its two main businesses separately and returning the cash to shareholders.

Enterprise put on 10p to 313.5p after the support services group unveiled a series of contracts worth £650m. These include deals with Thames Water, Three Valleys and Northern Ireland Water. Brokers believe further such contract wins are likely and hinted that upgrades to Enterprise's earnings forecasts could be likely in the near future.

Densitron Technologies ticked 0.5p better to 16p as Peter Gyllenhammar raised his stake in the electronic displays specialist. The Swedish value investor bought a further 200,000 shares via his Silverslaggan AB vehicle, talking his total holding to 11.4 million, or 17.8 per cent of the company. Recent news from Densitron seems to indicate that things are looking up at the group. Meanwhile, Densitron's stock is underpinned by a solid asset base which brokers believe leaves the company with a net asset value of 30p per share.

British Energy rose 0.22p to 11.0p. Dealers noted the group's shares now trade above the level at which they soared to after it emerged that the US hedge fund Appaloosa was building a stake in the electricity generator. Soon after this share price jump, Appaloosa sold down its holding.

Market Movers

Shell 393p (up 6.25p, 1.6 per cent). Posts better-than-expected first-quarter numbers and launches a share buy-back.

Boots 608.5p (up 9p, 1.5 per cent). Buys back 200,000 of its own shares at 598.75p.

AstraZeneca 2,603p (up 24p, 0.9 per cent). Assures investors that its cholesterol drug Crestor is on track to become a blockbuster.

Water Hall 5.5p (up 1.5p, 37.5 per cent). Pre-tax profits rise to £304,000 from £57,000 for the full year, while the company says it has made a good start to the new year.

Just Car Clinics 22p (up 4.5p, 25.7 per cent). Unveils a loss of £200,000 for the 15 months to December 2003 but makes reassuring comments about the company's prospects in 2004.

Proactive Sports 7.37p (up 1.37p, 22.8 per cent). Pre-tax losses for the first half of the year fall to £230,000 from £641,000 a year earlier.

Gold Mines of Sardinia 1.37p (up 0.25p, 22.3 per cent). Announces plans to raise £790,000 via a placing of new stock at 1p.

Superscape 32.5p (up 4p, 14.0 per cent). Signs distribution agreement for its 3D mobile games titles with a leading US network operator.

PPL Therapeutics 4.62p (up 0.37p, 8.7 per cent). Full-year losses narrow and the group says that takeover talks are continuing.

Zotefoams 73.5p (up 5p, 7.3 per cent). Says 2004 has started well and that sales growth is inline with expectations.

Earthport 2.75p (up 0.25p, 10.0 per cent). Appoints Russell Clarke as its chief operating officer.

ICI 217.25p (down 6.75p, 3.0 per cent). The group cautions that its raw material costs may be on the way up.

JD Wetherspoon 305p (down 18p, 5.6 per cent). Panmure Gordon downgrades to "sell" from "hold" after a profit warning from the pubs operator.

Regent Inns 50.5p (down 11p, 17.9 per cent). Issues a full-year profit warning, blaming the poor performance of its Walkabout chain, which prompts brokers to downgrade their forecasts.