Market Report: Small caps start to reveal their hidden value

IT IS BEGINNING to look as if shares on the stock market undercard, after a long run of poor performance, are at last emerging into the sunlight.

This year the small cap index has displayed unexpected vigour, and since the middle of last month has, with a few hiccups, made steady progress.

It is now around the level achieved in the middle of August and could be starting to run ahead of its fellow indices, the Footsie and the 250- strong mid cap index.

Takeover action and management buyouts have been major contributors to the sudden display of enthusiasm. They underlined what many investors had for long overlooked - the hidden value lurking in the less glamorous areas of the market.

The sudden batch of surveys drawing attention to the so-called public- to-private deals has, rather belatedly, added fuel to what was already a smouldering fire.

Yesterday the small cap index edged forward a further 3.6 points to 2,240.6. There was, for once, not much in the way of corporate action to create excitement.

The only deal was what looked like a 112p-a-share reverse takeover of Clan Homes, which jumped 20p to 110p. But there was the usual raft of rumours. Austin Reed, the menswear retailer, rose a further 14.5p to 113.5p on stories of Arcadia or Selfridges interest; Shami Ahmed, the man who created excitement by stake-building in House of Fraser last month, is said to have 2 per cent. Allied Carpets piled on 4p to 43.5p on suggestions that venture capitalists may pounce.

Struggling Tie Rack firmed by 8p to 36p as stories resurfaced of a merger with unquoted Sock Shop. Even Laura Ashley, up 2p to 20.5p, was accorded the benefit of a bid rumour with the upmarket womenswear chain, Hobbs, said to be on the prowl.

Union, once the proud Union Discount Co of London, rose 5p to 25.5p on vague talk of corporate action. And hopes that the signalled Albright & Wilson bid was about to appear lifted the chemical group's shares 10p to 100.5p.

Footsie followed Friday's advance with a 72.5-point gain to 6,023.2, its first time above 6,000 since the start of the month. The mid cap index fell 10.5 points to 5,177.2.

In recent weeks Footsie has been inclined merely to mirror the Dow Jones average, but with New York closed it had to stand on its own two feet, gathering inspiration from hopes that this week's flow of company results will take on an upbeat tone.

Barclays, figures today, was one of the best performing Footsie shares, up 74p to 1,590p. Other banks were firm, encouraged by Friday's Lloyds TSB results and the signal that it intends to seek out acquisitions.

BT, on its Internet boost, rose a further 27.5p to a 1,072p peak. Suggestions that SmithKline Beecham may return to the merger fray pushed the shares 22.5p higher to 863.5p.

National Power, said to be planning to float its international operations, was at one time 22p higher; it ended 8.5p firmer at 536.5p.

Greenalls, one of the market's bewhiskered takeover candidates, overflowed 36.5p to 376.5p as Whitbread, up 32p at 885.5p, was again rumoured to be preparing to strike.

Struggling Rank, results on Friday, firmed 2.25p to 205.5p after selling five outlets to Luminar, up 20p at 800p.

British Biotech fell 4.5p to 21.5p, a new low, following inconclusive trials for its Marimastat cancer treatment. The shares topped 300p three years ago.

Leisure groups firmed as stories again swirled of takeover action. Airtours flew 11p higher to 457.5p with Carnival again the name in the frame, and Northern Leisure rose 7p to 132p.

BSkyB firmed 1.75p to 508p, with the price probably restrained by stories that the share recovery since last week's interim results could prompt some remaining major shareholders to sell.

British Steel slipped 3.75p to 125.25p following reports it might bid again for Salzgitter, a troubled German steel maker. Tobacco shares were mixed after the Government stubbed out plans by the National Health Service to launch legal action to recover smoking-related health costs. Gallaher firmed 8.5p to 423p.

Rage Software, a computer games group, added 0.75p to 15.75p on confirmation of its deal with Microsoft and the forecast of profits of not less than pounds 3.1m in the year ending June. On-Line, another computer games group, rose 36p to 191p. It announced on Friday that it was in talks with Nintendo. Yesterday its marketing director, Clem Chambers, who sold shares during the riproaring run last month, pumped pounds 865,000 into the company, buying shares at 139p. He now has 27.3 per cent.

Zergo, an Internet security group, firmed 2.5p to 705p ahead of a meeting with analysts next month.

A profit warning lowered engineer Haden MacLellan 12p to 39.5p and Sherwood, the clothing group, fell 8p to 31p as a management buyout was abandoned.

Merrydown, the struggling cider maker, held at 26.5p: Teather & Greenwood has sliced its profit expectations. It is now looking for pounds 250,000 in the year ending next month with pounds 750,000 in the following year.

SEAQ VOLUME: 747.4 million

SEAQ TRADES: 79,062

GILTS INDEX: 114.19 +0.42

STOCKBROKER Charles Stanley captured attention with a 30p gain to a 470p peak; the shares have been strong this month and have nearly doubled since last autumn.

Although smaller stockbrokers are trading well, consolidation is the name of the game in financial services and there are whispers that Charles Stanley is in corporate talks which should be concluded soon. In its last financial year the company produced profits of pounds 4.3m.

SKETCHLEY, the former dry-cleaning chain which now concentrates on corporate textile and utility services, firmed to 44p after Sterling Investment Holdings (SIH) picked up 5.1 million shares, taking its stake to 16.27 per cent.

Much of the SIH holding has come from institutions, which seem to be bailing out. There are suggestions of some Italian interest in the shares, which have come up from their 26p low reached in October.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most