Market Report: London tech stocks bathe in Samsung's Korean sun
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Saturday 28 April 2012
Ring ring... It was all about mobile phones in the Square Mile yesterday as Samsung reported its stellar sales numbers. Investors prised open their Galaxy handhelds to see which London-listed suppliers might be inside.
Well, perhaps not literally, but one supplier was winning some fans. AZ Electronic Materials makes some of the chemical components for semiconductors used in the Galaxy range. Shares in AZ hit a fresh 10-month high as Samsung's numbers, plus a pretty upbeat trading statement from the company itself, boosted confidence among investors. Closing 2p up at 319.8p, the shares have had a terrific run since their flotation in November 2010 at 240p. Its private equity backers Carlisle and Vestar both sold out their shares in February.
Punters came sniffing around AZ at the start of the year amid talk it could be a takeover target but since then the stock's shot up from the 240s and a bid seems unlikely. But, as Goldman Sachs was noting after meeting management over coffee and croissants yesterday, the trading figures reaffirm AZ's status as a "conviction buy" up to 440p.
The vampire squid was noting comparisons with another Samsung Galaxy supplier, Arm, which has made many investors a pretty penny over the years. Arm skipped up 4p at 537p.
Another Samsung partner CSR – the old Cambridge Silicon Radio – enjoyed a further strong run on the back of the takeover rumours disclosed in this column yesterday. They jumped 11 per cent by the close of play, up 22.2p to 229.06p. The departure of chief marketing officer Kanwar Chadha on Thursday did nothing to stem speculation that something is afoot. Samsung was being talked about as a possible bidder, although it denied the tale. Schroders and BlackRock would be key to any deal for the maker of bluetooth technology – they own the best part of a third of the business.
Could it be man overboard at Man Group? Investor sharks licked their lips at reports of fraying investor patience with Peter Clarke, the chief executive of the under-fire hedge fund giant .
Mr Clarke has apparently been given six to nine months to save his job as the firm is hobbled by the performance of its flagship AHL fund. The shares have taken a hammering lately – plunging to 11-year lows – and billions have been pulled out of the firm, although talk of personnel change meant the stock perked up 13.25p to 107p – a leap of 14 per cent. Société Générale upgraded the firm from Hold to Buy, saying the shares have fallen too far.
The logic of the bulls was this: there's not much that Mr Clarke can do about AHL, whose genius computers have lost money in two of the last three years. But a new man at the helm could pave the way for a proper look under the bonnet at AHL and get it sorted. Alternatively, the new broom could pave the way for a predator like BlackRock to snap up the firm.
The tale may sound tenuous, but it was more than good enough for a quiet Friday in the City.
Man aside, the FTSE 100 index gained 28.39 to close the week off at 5,777.11 in what one trader described as "another frustrating day of doing nothing". Every time sentiment improves, something bad comes along to ruin it again, he moaned. Spain's two-notch downgrade by Standard & Poor's was yesterday's quencher.
So let's talk about bull semen: a topic not debated often in this day and age. Genus is a true British success story if ever there was one – it specialises in the high-tech world of livestock breeding, developing high-quality sperm to export to farmers around the world. Yesterday its shares leaped 7 per cent, by 94p to 1366.5p. One broker reported that there had been two major(ish) buyers o f the shares during the day, driving the price up to new year-highs.The rumour mill had it that there could be good news on the horizon for investors . Last time it updated was in February when it reported a 22 per cent rise in first-half profits thanks to strong Asian growth in both bull and pig semen.
Traders reported clients nibbling a few takeover candidates. Explorer Ithaca Energy ticked up 4p to 187p as long-standing chatter over a 250p a share approach from Kuwait did the rounds again.
The Irish materials firm CRH had a fine day, adding 48p to 1268p on an upgrade from JPMorgan brokers. The firm is set to receive €574m (£468m) for its 49 per cent stake in the Portuguese cement maker Secil after a three-year dispute with the industrial conglomerate Semapa, which owns the rest of the business.
Premier Farnell, the electronics distibuter led by chief executive Harriet Green was enjoying a strong day. It's been winning fans in the markets lately, recently being removed from UBS analysts' "least preferred" companies list. Yesterday the shares jumped 8.2p to 213.5p.
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