Market Report: Man Group sinks on worries about flagship fund

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The Independent Online

Cautious comments from Morgan Stanley put the skids under Man Group yesterday, leaving shares in the hedge fund manager as the worst performers in the blue-chip index. The US broker pointed out that the performance of Man's leading funds has been far from impressive when compared with that of rivals and warned that this is likely to discourage some investors from giving the company new cash to manage.

Cautious comments from Morgan Stanley put the skids under Man Group yesterday, leaving shares in the hedge fund manager as the worst performers in the blue-chip index. The US broker pointed out that the performance of Man's leading funds has been far from impressive when compared with that of rivals and warned that this is likely to discourage some investors from giving the company new cash to manage.

As it stands, Man's flagship AHL fund is some 16 per cent below its high, while the smaller RMF and Glenwood funds are off 3 and 2 per cent respectively. "We think that the upcoming newsflow from Man will be negative and as a result we think it difficult for us to be near-term strong buyers of the stock", the broker said as it cut its earnings forecasts and its rating to "equal weight" from "overweight". Shares in the group dropped 66p to 1,261p.

At the opposite end of the leaderboard, Wolseley roared 22.5p higher to 919p as UBS upgraded its forecasts for the building materials giant ahead of its results next week. The Swiss broker predicted the figures will make pleasant reading for shareholders. Meanwhile, profit taking left the FTSE 100 index 16 points lower at 4,592.3.

Somerfield lost 1p to 134.25p as Numis Securities came back from a meeting with the group's chief executive, Steve Back, with mixed comments. It underlined the fact that the food retailer is operating in a very competitive environment but praised Somerfield's move to become predominately a convenience store operator and indicated that sales in recent weeks have started to improve thanks to the return of more normal weather patterns.

EasyJet ticked 0.5p lower to 139p on fears that today's trading update from the budge airline could contain yet another profits warning. As it stands, analysts are expecting easyJet to generate a pre-tax profit after goodwill of about £50m for the current year.

Kidde rose 1.75p to a record 125p as the engineer carried out a series of presentations to institutional investors on Wall Street. United Drug also hit an all time high. Shares in the pharmaceutical wholesaler rose 6.5p to 211.5p as investors poured into the stock on whispers that November's results are set to impress. Burren Energy soared 21.5p to 393.5p thanks to a bullish drilling update from its Congo assets.

Colt Telecom dropped 1.75p to 46.5p as Investec Securities urged its clients to sell. It told them that market conditions remained highly competitive and that as a result the telecom group's profit margins will suffer. Similarly, Cable & Wireless fell 1.25p to 104p on the back of negative comments from JP Morgan. The US broker cut its rating to "neutral" from "overweight" citing concerns about the group's voice business. Elsewhere in the sector, easynet fell 5.5p to 79p and BT Group lost 1p to 181.75p.

Vanco dropped 1.5p to 285p after Allen Timpany, the chief executive of the computer network company, sold 700,000 shares at 285p each via his family trust. Even after the disposal he still retains a 59 per cent shareholding. A bullish maiden piece of research from Lehman Brothers pushed the stock broker Shore Capital 1.5p higher to 32.5p. Lehman set a 40p price target on the stock.

Provalis lost 0.25p to 7.62p as the biotech group raised £2.6m through a placing at 8p. Evolution Securities, Provalis's broker, believes that its in2it product is driving the company into a new phase of growth, with initial orders topping expectations. Celsis International ticked 1p better to 32.5p as it emerged that Sir Chris Evans, the biotech entrepreneur and non-executive director at Celsis, had bought 1.3 million shares at 31p each.

At the small cap end of the market, Cardpoint put on 3p to 107.5p after announcing the appointment of a new finance director. The company also said that it would issue a trading statement next week. Despite rumours to the contrary, Numis Securities believes that all is well at the cash machines operator.

Finally, investors should keep an eye on Optimisa, the cash shell. Its shares soared 30p to 292.5p after Ron Littleboy, its chairman, picked up 4,500 shares at 255p each. Dealers noted that Mr Littleboy, a former head of research at the investment bank Nomura, has been a persistent buyer of Optimisa stock in the past few months. He now controls 16.5 per cent of the company.

In its present form, the company has cash of £260,000, stakes in various quoted and unquoted companies worth £620,000 and property assets worth £156,000. This leaves it with assets of £1.1m and no debt. At yesterday's close, Optimisa was valued at about that but the figure fails to account for the millions of pounds worth of tax losses on the group's books, which make it a perfect candidate for a reverse takeover. Along with its last set of figures Optimisa said it was looking at such a deal. Gossips reckon it is presently mulling a link-up with a highly profitable company in the market research sector.

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