City Talk: Heavy metals nettle JM

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The Independent Online
Shares in Johnson Matthey responded well on the day it announced its interim results a week ago last Friday. Since then, though, they have slipped back to 532.5p from 553p on the day the results were unveiled. Scare stories about problems in its precious metals business revolving around the turmoil in South-east Asia are one reason for the decline. These rumours were probably generated by traders hoping to short the stock.

The results, however, were a clear indication of the group's sound health. First-half profits were up 14 per cent to pounds 58.2m. So why the company's shares remain on something approaching a 25 per cent discount to the market is a mystery.

More complex speculation has it that JM's role as a supplier to Intel could be under threat - in part either because of a slump in demand for computers, or the rise of the low-cost PC for less than $1,000 (pounds 597).

SBC Warburg Dillon Read sees earnings growth of 10 per cent, 20 per cent and 17 per cent over the next three years. On that basis, the shares remain a strong buy.

A newly quoted company of independent financial advisers (IFAs) is set to list on AIM shortly, raising pounds 5m of new money in the process. Inter- Alliance is coming to the market through an offer for subscription at 268p a share.

A nationwide firm of IFAs, Inter-Alliance hopes to see its registered employees rise to 1,500 over the next three years. At present it has eight offices, with 70 IFAs.

It also hopes to recruit heavily from the ranks of existing direct sales forces - a trend that matches the pattern of the industry as a whole.

There are pros and cons to investing in a company such as Inter-Alliance. On the one hand, it has an experienced management team, which could propel it towards rapid growth. However, any IFA who is seen cutting corners with clients brings down regulatory wrath, not just on the individual concerned, but also on the firm employing him or her.

DBS, another quoted firm of IFAs, has been fined severely for rule breaches.

Inter-Alliance's shares could show a lucrative return, but it's not for widows and orphans.

The elusive quality of the defence document in the bid by Bupa for Care First over the weekend, may give the impression of a side that has already thrown in the towel.

Bupa's offer, is, by any standards, generous. Few shareholders will feel able to resist the all cash offer at 150p.

Bupa says it can afford to pay this sort of money, because it can afford to take a long-term view. It is a curious irony that when companies say they are willing to do this, they are lambasted for paying over the odds. Bupa is impervious to such criticism, of course, because of its private status. It can do very much what it wants to do.

However, it would be understandable if there were some chief executives out there who rued the decision by Bupa not to bid for them.

The exit price on their share option packages would be unlikely to be matched by another bidder.

The only other option - a rival bid - is unlikely for that very reason. There were prospects former chief executive Chai Patel might be able to mount some sort of rival offer, but hopes of that are fading.

But if you are a Care First shareholder, better to be safe than sorry. Hang on to your shares, just in case of an improved offer.