While there is a very strong case for arguing that Goldman Sachs is already the world's largest hedge fund, it is still officially an investment bank. However, if market rumours are to be believed, Goldman could be on the verge of making a play for the world's largest quoted hedge fund manager, Man Group.
Man has enjoyed spectacular growth in the past few years, growing its market capitalisation by more than 550 per cent in the past six years. Traders said despite recent weakness in its flagship AHL Diversified Futures Fund and exposure to the disastrous Amaranth hedge fund, the company still produced an impressive 23 per cent growth rate in Europe. According to one trader, Goldman would have to pay at least 650p to buy Man Group, "and possibly much more", but the bank has very deep pockets and a bid is certainly not beyond the realms of possibility. Man shares rose 2.5p to 441.75p by the close.
Investment bankers had a busy weekend with no fewer than three high-profile new issues on offer yesterday morning. GUS began trading as Experian and Home Retail Group, with both new issues performing strongly at the start. Experian opened at 560p and quickly advanced to more than 600p before closing at 576p, while Home Retail ended at 410p, down 10p. Meanwhile, Hogg Robinson, the executive travel group, placed at 90p, a huge discount to the 140p-220p its owners, Permira, had hoped for. The shares closed at 95.5p, with more than 155 million shares changing hands. Finally, Biffa, the waste services group, demerged from Severn Trent and opened at 260p and traded as high as 282p before closing unchanged.
A combination of demand for new issues, pharmaceutical and commodity gains helped the FTSE 100 buck the global market trend by closing 25 stronger at 6,026.2. Global markets were spooked by the North Korean nuclear test, driving Asian currencies substantially lower against the dollar but stopping the decline in the oil price. BP, up 6p to 578.5p and Shell, 14p firmer at 1,781p, were the main reasons behind London's rally.
Mining stocks occupied eight of the top 10 slots in the blue-chip index, after a rally in the futures markets on the North Korean developments. London traders are expecting a quiet week from metals, though, as the annual LME week celebrations began last night. Lonmin, 122p better at 2,602p led the way, although most traders dismissed the influence of a $1bn (£536m) investment in South African mining rights. The copper plays Kazakhmys, up 51p to 1,139p, and Vedanta Resources, up 54p at 1,265p, were also in demand. The latter will update the market on production today.
A bearish note on retail stocks from Goldman Sachs failed to have much impact, despite downgrading Debenhams and Woolworths to "sell" from "hold". The broker believes Debenhams will find it difficult to improve like-for-lie sales and cut its price target to 172p, while adding that Woolworths is "structurally challenged and faces a significant amount of execution and integration risks". Debenhams fell 1.25p to 184.5p; Woolworths added 0.75p to 35.75p.
Mid-cap oil exploration and production stocks were in focus after a recent sell-off that has seen some lose more than 15 per cent of their value, on top of the stronger oil price. Dana Petroleum led the FTSE 250 risers with a gain of 37p to 1,186p, after confirming that drilling has begun at its Aigrette-1 project off the coast of Mauritania. Burren Energy, 23p better at 850p, and Venture Production, up 18.5p to 737p, completed the top three winners in the second-line stocks.
In the small caps, Asia Energy took another dip, following on from Friday's re-listing. Some investors are not happy that the shares began trading again when the company has received no news from the Bangladseshi government about the future of its Phulbari coal mine. With an election due in three months in Bangladesh, there is speculation that the shares began trading again to avoid potentially losing its listing if the suspension carried on. With about 57p of cash per share there is a floor for the shares, but little incentive for any investors to buy the stock. The shares closed 8p worse at 87p.
Firecrest Diamonds should be commended for its operations update released yesterday morning - at five lines long, the company cannot be accused of blinding investors with jargon, unlike many of its competitors. The South African mining group reported good progress, sending the shares 17.5p firmer to 108p.