Market Report: Man Group rises on report from the Fink tank
Friday 17 February 2006
Man is the world's largest quoted hedge fund manager, home to $46bn of alternative asset funds, and makes its money by charging management fees based on administration charges and fluctuating, but potentially much higher, performance-based fees.
Man has strength not only in hedge funds but also in commodity funds and trading platforms, but the company would not come cheap; its shares rose 72p to close at 2,199p yesterday, giving the company a value of more than £7bn including debt. The company also recently bought the regulated European assets of the collapsed futures broker Refco. Traders said Man would offer BlackRock and Merrill a huge foot up in the rapidly growing alternative assets market.
The Swiss bank UBS also put its weight behind Man yesterday by publishing a "buy" note with a 2,525p target. The broker increased its performance fee income forecast in 2006 from $340m to $425m, and said some estimates from a year ago now looked "mean".
The rival fund managers Schroders and Amvescap also gained on the Man speculation, with Schroders up 15p to 1,117p and Amvescap rising 10.25p to 532.25p.
Cable & Wireless closed the day strongly after a flurry of late buying, having been in the red for most of the session. Takeover speculation has done the rounds before but traders took the late rally as a sign that a bid may be likely, either from a trade buyer or, more likely, from a private-equity firm. Its shares improved 1.5p to close at 107p.
BOC is in the middle of its own takeover battle with its smaller German rival Linde. The stock rose another 33p to 1,490p as traders continued to talk of a counter offer priced at 1,600p from the French gas giant Air Liquide. One trader said: "It is unlikely that we will see an all-out bidding war for BOC but one or two other players entering the fray could make things interesting."
Continued corporate activity speculation drove the London market as the FTSE 100 made further gains above the 5,800 level, with the heavyweight mining sector once again providing the bulk of support. A late rally saw the market close up 37.4 at 5,828.9.
For once it was not just commodity prices that drove the miners higher. Analysts at the Australian investment bank Macquarie began the day by suggesting that BHP Billiton, which reported record interim profits on Wednesday, might be looking for a major acquisition. Xstrata was the favourite among traders and its shares surged 24p to close at 1,645p, with Kazakhmys also rising strongly, up 27p to 864p.
In the second line stocks, De La Rue, the bank note printing firm, pleased the market with an upbeat trading statement saying that 2005 pre-tax profits would be "significantly" ahead of estimates. Its stock surged 46.25p, a rise of 9.8 per cent.
In the mid market, SCi Entertainment continued to baffle traders and market makers after announcing on Wednesday that the takeover talks it had been involved in would not now lead to an offer being made for the company. Despite what would normally be seen as a setback, its stock closed 10p higher on Wednesday after an early sell-off, and rallied a further 24p yesterday to close at 514p. One market maker said: "It is a very strange reaction. All I can think of is that there might be another buyer out there who is prepared to pay more than the previous suitor was."
Gaming VC, the online video gaming company, was well bid, rising 26.5p to 414p, as bid speculation resurfaced. Traders had talked about a bid pitched at 550p in December and the unnamed suitor is thought to be having another look.
In the small oil stocks, Falklands Oil & Gas continued to attract retail buyers on the back of rumours surrounding a bid from an Indian rival. The thinly traded shares have been on a strong run recently, mainly through retail buyers, and added another 12.5p to close at 178p, an all-time high.
Online gambling stocks have been in focus all week, and yesterday saw the latest addition to the sector as the software supplier Excapsa debuted on AIM. Its stock was placed with institutions at 110p, although recent negative news flow on the sector prevented the shares from improving and they finished the day unchanged despite the offer being four times oversubscribed.
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