One analyst said: "Of course Tate & Lyle is going to have positive things to say. It would not go to all the trouble and expense to getting investors to turn up to its presentation in order to feed them bad news." But any rise in the group's share price is very costly for those with bear positions in the stock.
Many hedge funds started betting against the company when it emerged that Wal-Mart was selling an alternative to Tate & Lyle's zero calorie sweetener, Splenda, at a 30 per cent discount. However, the UK company soon discovered that Wal-Mart's product, called Altern, was in fact a direct copy of Splenda which it had supplied to a manufacturing customer who had then sold it to the US retail giant. Tate & Lyle quickly put the kibosh on this arrangement and closed off Wal-Mart's supply.
This has left investors with bear positions in Tate & Lyle stranded and yesterday they scrambled to close them. At one point, dealers estimated that the short position in the stock stood at over 10 per cent of its share capital.
Elsewhere, Scottish & Newcastle put on 13.75p to 469p amid fresh rumours of a bid for the brewer. Despite SABmiller's major acquisition in South America this summer, it was again talked of as the most likely bidder for S&N.
SAB, 1p better at 1,058p, is today expected to issue a trading statement. Credit Suisse First Boston predicts that it will be a mixed affair with strong performances by the group in central Europe and South Africa offsetting slowdowns in Africa and North America. Clearly those buying into S&N yesterday will be particularly pleased if SAB does unveil an offer for the group along side its trading statement. However, analysts were sceptical about an imminent deal.
Hot money once again poured into Kingfisher, 3.25p higher at 215.75p. In recent months, the DIY giant has seen short-term spikes in its shares on the back of bid rumours and news that the legendary US investor Warren Buffet has a small stake in the group. That aside, the overall trend in the stock since the start of the year has been one of decline.
Cable & Wireless, 2.75p lower at 116.25p, was hit by the double whammy of Morgan Stanley trying to sell 14 million shares in the telecoms group on behalf of a client and Goldman Sachs slashing its earnings forecasts.
Man Group retreated 48p to 1,549p as Teather & Greenwood urged its clients to abandon the hedge fund manager. It believes Man's growth rate is going to slow drastically over the coming years.
InterContinental Hotels, off 1p to 708p, and Whitbread, 11.5p weaker at 989.5p, both lost ground despite reports that the soft drinks firm Britvic is to push ahead with its £800m flotation before Christmas. InterContinental has a 47 per cent stake in the Tango and Robinson's maker while Whitbread holds 23.75 per cent. Both are believed to be keen to cash in their chips.
Moderate gains on Wall Street helped the FTSE 100 index close 6 points better at 5,380. After touching a fresh all-time low of 67p, PartyGaming rallied to finish the day 0.5p higher at 71.5p. Fellow internet gaming operator Empire Online was not so lucky. It lost 19p to a new low of 102p.
Robert Wiseman Dairies dropped 20.5p to 272p on concern that the group may be about to lose one of its major clients. Meanwhile, M&C Saatchi fell 5.5p to 106p after the advertising group confirmed that it had lost British Airways as a client to France's Publicis. Following the confirmation, Numis Securities said: "This is a significant disappointment for M&C Saatchi as BA was the group's oldest client and represented approximately 7 per cent of group revenue."
The construction software provider Eleco put on 3.75p to 39.75p on the back of a 21 per cent rise in full year operating profits. Eleco also boasted of a strong start to trading in the first quarter of its new financial year. Mayborn ticked 8.5p higher to 434.5p despite the sale of 100,000 shares at 425p by Norman Crausay, an executive at the household products group.
Sanctuary rallied 0.34p to 7.23p but many brokers urged investors not to chase the stock higher. They pointed out that the record label's finances are in a precarious state. Sanctuary is bleeding money while struggling under a £70m debt burden against a market value of just £25m. Should the group lose the confidence of its bankers it faces administration.Reuse content