Man Group shares broke through the £20 level yesterday and if you believe the latest research from Deutsche Bank further gains are on the way at the hedge fund manager. Man finished the day up 41p at an all-time high of 2,001p as Deutsche tipped the group as likely to register the strongest earnings growth in the fund management industry over the next two years.
According to the German broker, the stock's present valuation fails to capture the positive outlook for the hedge fund industry in 2006, nor the significant earnings boost the company's recent acquisition of Refco could produce. Deutsche said: "In our view hedge funds remain an attractive and under-invested growth area and we recommend exposure to the industry through Man."
The broker also made bullish comments about the wider asset management industry, helping Amvescap rise 14.25p to 468p, Schroders add 1.5p to 980.5p and F&C jump 8.5p to 184.5p. It predicts the year ahead will see solid earnings growth and further consolidation across the sector. Among the traditional players, Deutsche was most positive about Amvescap and suggested the restructuring being implemented by the group's new chief executive, Martin Flanagan, has the potential to boost profits in a big way.
Yell, up 9.75p to 563.5p, was boosted by Citigroup, which raised its price target on the directories player to 622p from 526p. It believes the upcoming report from the Competition Commission (which is looking into the classified directory market) could prompt a sharp rally in the group's shares. The Commission is due to publish preliminary findings at the end of the month.
Alliance & Leicester lost 17p to 990.5p as Fox Pitt Kelton urged its clients to take profits from the mortgage lender and switch into Lloyds TSB, off 0.25p to 492.5p. A&L shares have risen by an impressive 22 per cent since October, leaving the stock looking "over-extended", according to the broker.
Compass lost 5.5p to 225p as Citigroup sold 31 million shares at between 224.5p and 225.5p on behalf of an institutional client. Meanwhile, Goldman Sachs placed 7.5 million Premier Farnell shares at 175p. The sale left the semiconductor distributor down 6.5p to 177.25p on the day.
Dealers reported nervous trading in JJB Sports, steady at 170p, before today's post-Christmas trading statement from the sports retailer. Analysts worry that the update is likely to be grim given the pressure the company is under from its rival Sportsworld. Richard Ratner, a retail analyst at Seymour Pierce, suggests that the group has suffered a 5 per cent drop in second-half like-for-like sales. He believes that margins at JJB have also been under severe pressure as it has been forced to discount heavily to stay competitive.
BBA dropped 8.5p to 330.5p as ABN Amro warned that the City is too optimistic about the price the group will secure for its Fiberweb textiles business. Hence, it cut back its stance on the group to "hold" from "add". A profit warning from Redrow, 20p lower at 515p, undermined sentiment towards the wider housebuilding sector. Barratt Developments fell 23.5p to 989p, Bellway lost 34p to 1,122p, Taylor Woodrow was 4.5p lower at 382p and Wilson Bowden dropped 9p to 1,451p.
At the smaller end of the market, Kier Group added 12p to 1,220p after Dresdner Kleinwort Wasserstein named the stock as one of its favourites in the small-cap arena for 2006. The broker said: "In our view, there is hidden value in almost every nook and cranny of this most conservative of building stocks."
Alltracel Pharmaceuticals, unchanged at 10.25p, said it was in a good position to break into the black this year. Pursuit Dynamics, off 0.75p to 195.25p, disclosed the purchase of 10,000 shares at 197p by its chairman Andrew Quinn. European Nickel, steady at 27p, saw Felix Pole, its chairman, pick up 75,000 shares at 27p. Avocet Mining ticked 2p higher to 113p on hopes the group will soon unveil a positive drilling update from its central Asia gold operations.
Avanti Screen Media gained 1p to 275.5p after boasting that it had won a £1.2m contract to install its satellite and wireless base stations in the West Midlands. These will help rural communities in the region gain access to broadband internet services.
3DM Worldwide retreated 2p to 31.75p after unveiling a £4.75m convertible loan deal. Last week rumours circled Square Mile dealing rooms that the company, which claims to have invented a plastic that is as strong as steel, had approached the broker JM Finn about putting together a deeply discounted rights issue. Given yesterday's convertible loan note deal, analysts said a rights issue from 3DM is now unlikely.Reuse content