Market Report: Gulf Keystone cops it as boss sells down
Tuesday 23 April 2013
Todd Kozel led by example yesterday. News that the boss of Gulf Keystone Petroleum had transferred the bulk of his shares in the oil explorer was swiftly followed by punters selling theirs.
Mr Kozel, executive chairman and chief executive of Gulf Keystone, transferred just under £16.9m worth of shares to a third party, leaving him with just 255,000 shares – or around 0.03 per cent – of the £1.4bn Kurdistan-focused oil company. He said the move was "in respect of a repayment in full under a financing arrangement".
Last year, he agreed to transfer 17.4 million of his shares as part of a divorce settlement but the news of the transfer yesterday concerned investors.
The Aim-listed explorer has been a favourite with retail punters but its updates have been far from reassuring of late. It is involved in a court case in London with Excalibur Ventures, which has claimed that a 2006 agreement entitles it to a 30 per cent share of Gulf's discoveries. Gulf disputes this, and the case continues.
The group has also faced problems with the export of oil from the Kurdistan region of Iraq, where it operates. Iraqi officials imposed a ban on exports from Kurdistan after a dispute on payments from the region.
Gulf's shares slumped 15.75p to 154.75p yesterday. Like its retail investors, traders were also less than impressed with the news. Marc Kimsey, senior trader at Accendo Markets, said: "For all the fairy tale that surrounds this stock, the facts are of real concern to the trading floor. Compared to proven reserves, production levels are almost non-existent – as is any formal oil and gas law. Geopolitical tensions remain, the court case continues, and then we learn that the chairman has lightened his holding to just a couple of hundred thousand shares. Without significant good news, there is no reason to take on exposure."
Moving to the FTSE 100 index, the London market began on a positive note, helped by news that Italy has elected a president and the G20 meeting accepted Japan's stimulus plan. But the blue-chip index gave up all its gains once US markets opened because of poor American housing figures. The index dipped 5.97 points to 6280.62.
One of the biggest losers on the index was Eurasian Natural Resources Corporation, the Kazakh miner that is subject to a potential bid to be taken private by its majority shareholders. The shares rallied 24 per cent on Friday when the news emerged but were down 6.9p to 284.1p yesterday.
Miner Randgold Resources was boosted by the stabilising of the gold price at around $1400, and its shares glistened up 206p to 4,870p.Banks were in favour ahead of Barclays' results tomorrow and Lloyds Banking Group issued £350m worth of new shares as part of its strategy to improve its balance sheet. Lloyds added 1.64p to 49.13p and Royal Bank of Scotland, declared a buy at Liberum Capital, was 5.7p better off at 286.2p.
Mid-cap tech group Spirent Communications warned its profits for the first three months of the year would be lower than expected but a handful of analysts said it was still good to buy the shares. Scribblers at Panmure Gordon said "the future has been delayed – by a quarter or so", and reduced their target of the telecoms testing kit supplier to 188p. The shares ticked up 0.4p to 122.4p.
A full-blown profit warning and management shake-up were sneakily announced at pawnbroker and gold-seller Albemarle & Bond on Friday night after the market had closed.
The news tarnished the small-cap's share price yesterday as the City digested the news. Albemarle said both that chief executive Barry Stevenson has "brought forward his planned retirement", and that a slow-down in acquiring gold will mean this year's profits will be "materially below" market expectations.
The City thinks Albemarle's problems are not sector-wide and Andrew Wade at Numis Securities prefers rival H&T, which he thinks is a "better managed, more conservatively forecasted business". Albemarle said gold buying continued to slow. Gold prices fell 14 per cent last week and Albemarle expects this decline to accelerate.
Numis rates the shares a reduce with a 150p target price. The shares plunged 35.53 per cent or 66.13p to 120p. Canaccord Genuity's analysts think "the shares are unlikely to recover in the short term … until greater clarity emerges on the impact of the trends outlined on forecasts and dividend policy".
Snap up shares in Informa, Numis continues to urge. The broker explains that any fall in first-quarter revenues at the publishing and conferences group is a result of the early Easter and events being rescheduled. It adds that the second quarter "will show strong growth as timing differences unwind". The shares are 479.3p with a 557p target.
Sell: Taylor Wimpey
Dump shares in Taylor Wimpey, is Panmure Gordon's advice. The broker says the housebuilder, which issues a management statement on Thursday, "will no doubt report a good start to this year" but adds its progress is priced into its valuation. The shares are 91.05p a pop with a 69p target.
Hang on to shares in Spirent, Canaccord Genuity advises. The broker said it had already downgraded its estimates for the telecoms testing firm "in expectation of a poor first quarter" but added that after yesterday's profit warning, the hill it has to climb "looks more like a cliff". Its balance sheet stops it being a sell. The shares are 122.4p; target is 120p.
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