Market Report: Gossips say Hunter to sell House of Fraser stake

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House of Fraser, or more specifically its biggest shareholder Tom Hunter, was the talk of the Square Mile yesterday. Brokers reported whispers that the Scottish retail entrepreneur may be looking to sell his 11 per cent stake in the company, a holding worth about £30m.

House of Fraser, or more specifically its biggest shareholder Tom Hunter, was the talk of the Square Mile yesterday. Brokers reported whispers that the Scottish retail entrepreneur may be looking to sell his 11 per cent stake in the company, a holding worth about £30m.

Mr Hunter picked up the shares two years ago and has certainly done well from them. He is estimated to be sitting on an £8m profit from his investment after a 25 per cent jump in the value of House of Fraser stock over the past 12 months. Analysts believe a share sale by Mr Hunter could prove a timely move, given some of the headwinds facing the company.

HoF, like most clothing retailers, faces a potentially tricky autumn after a poor summer. And further down the line, it could come up against stagnant consumer spending, if interest rates continue to rise. Another potential threat to the group's share price, and Mr Hunter's potential profit, is the prospect of a bid by HoF for Allders. The appointment of Dresdner Kleinwort Wasserstein as HoF's second corporate broker last month set tongues wagging that a move on Allders may be in the offing.

HoF, steady at 115p yesterday, has the firepower for such an acquisition and may be able to prise the under-performing Allders from its backer, Minerva, at a reasonable price. The property group is itself in a state of flux after its management hoisted the for sale sign last month. A link-up of the two would certainly hit HoF's share price until it had become apparent that the deal had been a success.

Elsewhere, ARM Holdings managed a modest rally after Monday's sharp drop. Shares in the semiconductor designer finished 1.75p better at 83.5p and were supported by news that Jeremy Scudamore, a non-executive director, had bought 55,000 shares at 83.5p each.

ARM was held back from further gains by JP Morgan, which cut its rating on the group to "neutral" from "overweight". The US broker argued that ARM is paying too much for its American peer Artisan Components. "We see few revenue synergies and no cost synergies from the deal which makes us uncomfortable with the premium ARM has paid for Artisan,"JP Morgan said.

EMI added 6p to 213p on the back of positive music industry data. According to the latest figures from the British Phonographic Industry, CD sales increased by 16 per cent in the second quarter, the first positive move for five years. Investec Securities believes that this bodes well for EMI as it shows the industry is making progress in its fight against music piracy and that its efforts to reinvigorate sales through innovation are now having a positive effect.

Cookson jumped 2.25p to 33.5p after Investec Securities drew investors' attention to the fact that the group has gone from being the most expensive stock in the engineering sector to the cheapest over the past four months. The broker noted that in just the past month Cookson has fallen 13 per cent and Investec told its clients that the stock is beginning to look attractive.

Singer & Friedlander improved 11p to 277p on talk of buying by one of the merchant bank's two Icelandic shareholders. Kaupthing Bunadarbanki, a bank, has built up a 22 per cent stake in S&F while Burdaras, a local investment company, has a more modest 4 per cent holding.

In the FTSE 100, BP fell 4.25p to 484.5p, BG lost 5p to 335.5p and Shell gave up 5p to 396.75p as the price of crude oil continued to fall. Dealers pointed to the brighter outlook for crude production in Iraq as the reason for the drop and predicted that the price would drop to the $40-a-barrel level in the absence of further output disruption in Iraq.

WPP put on 5p to 498p after Sir Martin Sorrell, the chief executive, disclosed the purchase of 200,000 shares at 495p each. This takes his total holding in the advertising giant to 17.2 million shares, or 1.5 per cent.

Among small-caps, NeuTec Pharma ticked 7.5p better to 467.5p on talk the group is on the way to securing a major distribution deal for its Mycograb anti-fungal treatment. McBride gained 7.75p to 129.25p after the detergents maker was heard to have held a series of bullish meetings with analysts. Trading at the group is said to be strong and market professionals reckon the company is in a position to raise its dividend at the next results.

Paramount fell 3p to 31p as investors started to fret that the bid for the restaurants group may never arrive. It has been three months since the owner of the Chez Gerard chain announced that it had received a 35p-a-share offer for the company. Investors have heard nothing more concrete from Paramount since.

Hansard Group lost 2.5p to 41.5p as the City PR company announced that it had raised only £6.8m of the intended £10.8m from its placing. It complained that one investor had failed to pay up for their allotted shares.

Market Movers

¿ British Airways 224.5p (up 5.5p, 2.5 per cent). Continued retreat in the oil price is great news for the airline.

¿ Marshalls 259p (up 11.25p, 4.5 per cent). Traders move into the construction group ahead of next month's interim results.

¿ Punch Taverns 451p (up 17p, 3.9 per cent). Arbuthnot Securities urges its clients to buy into the pubs group after its recent underperformance.

¿ Berkeley 1,216p (up 33p, 2.7 per cent). Says it plans to leave behind its housebuilding heritage and concentrate on larger-scale regeneration projects.

¿ Glenmorangie A 1,330p (up 272.5p, 25.8 per cent). The Macdonald family put the company up for sale.

¿ Johnston Group 485p (up 80p, 19.8 per cent). Anglo American bids 491p a share for the company, valuing it at £53m.

¿ BioProgress 107.5p (up 12.5p, 13.2 per cent). Says it is supplying Colgate with its special in-the-mouth dissolving film technology.

¿ Claims People 2.25p (up 0.25p, 12.5 per cent). Says it is optimistic about the future after posting a major rise in its interim results.

¿ Generics 8.5p (up 0.88p, 11.6 per cent). First-half losses narrow to £1.4m from £7m a year earlier.

¿ Persimmon 647p (up 6p, 0.9 per cent). Brokers applaud interim results which see profits at the group soar to £220m from £150m a year earlier.

¿ Chaucer Holdings 47.5p (up 2.5p, 5.6 per cent). Management assures investors that all is going to plan at the Lloyd's insurer.

¿ Innovision Research 70.5p (down 9p, 11.3 per cent). The group's AGM statement fails to excite the market.

¿ N Brown 113.5p (down 3.5p, 2.9 per cent). Traders take profits from a stock which has been recently buoyed by takeover speculation.

¿ Hammerson 730p (down 2p, 0.3 per cent). Profit taking after solid interim results from the property giant.

¿ Intec Telecom Systems 54p (down 1.5p, 2.7 per cent). News of a further £500,000 contract in Russia fails to grab investor interest.