Troubled Goshawk lifted by talk of predator waiting to pounce

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The Independent Online

Takeover talks may soon be back on the cards at Goshawk, the general insurer, if the latest stock market gossip is to be believed. Dealers reckon a predator has been running the slide rule over the group in recent weeks and could soon be ready to strike. Such talk sent Goshawk 1.75p higher to 36.25p yesterday.

Takeover talks may soon be back on the cards at Goshawk, the general insurer, if the latest stock market gossip is to be believed. Dealers reckon a predator has been running the slide rule over the group in recent weeks and could soon be ready to strike. Such talk sent Goshawk 1.75p higher to 36.25p yesterday.

The takeover of the troubled insurer would be great news for its long-suffering shareholders, who have seen the value of their investment collapse by more than two-thirds over the past 12 months after a string of profits warnings. The disaster at the company was unwittingly caused by its Lloyd's of London insurance division. The unit, now closed to new business, was unfortunately involved with the insurance of the Columbia space shuttle, which crashed last February, and underwrote business for the now collapsed Accident Group.

Goshawk's main remaining asset is its Bermuda-based property and casualty reinsurer, which according to analysts is a prime insurance sector asset. Purely based on the prospects for its Bermuda operation, sector specialists believe Goshawk is currently greatly undervalued. However, the problem facing any potential buyer of the company is calculating the total liability facing the group's Lloyd's business, which is far from clear at present.

Something of a buzz surrounded British Energy, up 0.65p to 6.5p, on talk of heavy demand for the group's shares from the US hedge fund Appaloosa Management LP. Last week, the fund disclosed a 4 per cent stake in British Energy and word has it the hedge fund has significantly added to its holding. Appaloosa is run and principally controlled by David Tepper, a star of the American hedge fund industry.

Among blue chips, Legal & General added 0.25p to 99.25p on whispers the heavyweight broker Dresdner Kleinwort Wasserstein will issue a bullish piece of research on the stock today. Dealers hear that L&G's fund management arm has been a particularly strong performer of late.

Traders piled into mmO 2, up 2.75p to 84.5p, before tomorrow's subscriber growth figures. Analysts reckon the numbers will make pleasant reading for shareholders. Investec Securities forecasts mm0 2 to boast that it has added more than 600,000 new subscribers to its network for the three months ending December 2003. Bulls of the stock think this estimate is far too conservative and believe upgrades to market expectations could well be likely in the wake of tomorrow's data from the company.

The wider FTSE 100 index dropped 9.3 points to 4,381.4, while the FTSE 250 put on 33.5 points to 6,057.4. Jarvis dropped 3.25p to 146.5p despite the purchase of 20,000 shares at 146p by Kevin Hyde, the chief executive. ICAP, off 27p to 1,568p, announced the launch of a new independent global futures business that will initially focus on interest rate futures. French Connection rose 12.5p to 387.5p as Numis Securities held a positive meeting with the group's management team as the retailer prepares to go into close period. Such was Numis' optimism after the tête à tête that the broker upped its price target to 425p from 380p. "We believe that the company's retail business remains on track, despite rumours to the contrary in December," it said. The broker estimates that like-for-like sales at French Connection will probably be less impressive than in the past but forecasts a solid gross margin at the group.

Quintain Estates ticked 6.5p higher to 346.5p as the property company said it would make rapid progress in the development of the area surrounding Wembley Stadium after the Government delisted the Palace of Arts and Industry building in Wembley. It had been feared that if the Palace had remained as a listed building, it would have greatly slowed the development of the area.

Ukbetting put on 3p to 60.5p amid rumours the group is close to securing yet another earnings-enhancing acquisition. Bullish talk surrounded Oystertec, 0.5p higher to 17.75p. According to market gossips, cost cuts at the group may well help it to beat analyst expectations when it next posts results. Meanwhile, Mean Fiddler put on 1.5p to 40p on talk that the events organiser has won the rights to run several music festivals in the US this summer.

IndigoVision soared 8p to 46.5p as directors piled into the stock. Five directors bought 445,000 shares in total at 39p. Leading the buying was Oliver Vellacott, the chief executive. He picked up 289,000 shares, which takes his total holding in the video technology group to 1.3 million or 19 per cent.

Even after yesterday's sharp share price rise, the company's stock market value is still well below the amount of cash it has on its balance sheet. This values the group's business, which develops video products for security markets, at zero.

Investors should note this is a business which, if IndigoVision's management prove to be correct, will be profitable either this year or next. Given yesterday's hefty director share purchases, it is fair to speculate that this scenario is more likely to come true than not. And if IndigoVision does break into the black, its shares should trade at well above yesterday's close.

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