Market Report: RBC warning ruins Roman’s holiday

 

Manny Roman was having a good August until a warning from analysts at RBC Capital yesterday sent shares in the hedge fund he runs south again. The City had started to think that Mr Roman, the chief executive of Man Group, had got the struggling money manager to turn a corner.

At its recent first-half results, it reported the rate of funds leaving its fund had slowed and pre-tax profit came in at £122m, compared with a £163m loss last year. The shares jumped 18 per cent at the time. But scribblers at RBC yesterday reiterated their sell rating and said: “While net outflows slowed … they are still ongoing” and the business remains “in decline and is currently a story of cost-cutting”.

RBC is concerned that “cost cuts are necessary to offset a declining top line” and they warned that the stock is really only suited “for those with the ability to trade quickly”.

Man stumbled towards the bottom of the mid-cap index on RBC’s sell advice and the shares declined 3.8p to 88.65p. RBC said the share price is related to performance and a return to net inflows, so if “neither of these materialises” the shares will be worth 70p, “nearly 25 per cent below current levels”.

Across the wider market, disappointing Japanese GDP figures dented the FTSE 100 and it lost 9.05 points to 6,574.34. But the market was waiting for further macro data later this week.

Cevian – the investment firm whose UK arm is chaired by Lord Myners, the former government minister for UK financial services – emerged as having a 5.11 per cent stake in security giant G4S. This comes in the wake of June’s revelation that the Bill & Melinda Gates Foundation has a 3.2 per cent stake.

G4S has faced a series of problems since its Olympic Games security fiasco last year. The group started yesterday’s session in the red but after Cevian’s interest was confirmed it rose 8.6p to 244.1p.

There’s still a long way to go for the stock, however, and it remains more than 20 per cent lower than at the beginning of May.

Close to the top of the blue-chip table was Prudential. The insurer was boosted by good results at its Asian business and a 22 per cent surge in operating profits. It climbed a respectable 48p to 1,232p.

Punters took profit on some airline stocks after they recorded all-time highs earlier this month. IAG plunged 11.3p to 312.2p.

The boss of Experian sold shares in the credit-checking agency worth £1.2m. Don Robert sold 100,000 shares at 1,218.28p each last week, leaving him with 1.39 million shares in the Dublin-based group. Experian was 7p worse off at 1,216p.

Genel Energy, the oil explorer backed by Nat Rothschild and Tony Hayward, passed its 2011 float price of 1,000p during the day when it announced it had bought a 40 per cent stake in Ethiopia’s Adigala block from private group New Age. It jetted up 7.5p and finished the day level with its float price at 1,000p.

Ted Baker appeared out of fashion with the City yesterday and was bottom of the mid-cap index, down 86p to 1,825p.

Highland Gold Mining, a Russian gold producer partly owned by the oligarch Roman Abramovich, said it is on track to meet its full-year production target and was 5p brighter at 73p.

Top Level Domain Holdings said it would bid in a private auction for four internet domain names and it advanced 0.125p to 5.75p.

The tumbling gold price, fewer people flogging their gold jewellery and regulatory pressures hit the small-cap pawnbroker H&T. The group slashed its dividend and its shares fell more than 22 per cent – to their lowest level since 2006, down 38.5p to 132p.

Monitise has agreed a deal with Canada’s Desjardins for mobile payments and moved up 1.25p to 40.75p.

The technology expert BATM Advanced Communications revealed strong revenues and improved margins. The company said it was on track for good growth for the full year and it was 0.75p healthier at 15.375p. 

Zhongrun International Mining has invested in AIM-listed Vatukoula Gold Mines and Vatukoula shone 2.5p higher to 9.5p. The AIM-listed miner Firestone Diamonds appointed former De Beers veteran Stuart Brown. He is joining Firestone as executive director and will be chief executive when Tim Wilkes stands down at the end of November.Shares were flat at 2.5p.

Buy

Moneysupermarket.com

Snap up shares in Moneysupermarket.com, Jefferies suggests.  The broker thinks “better communication could have perhaps swerved” the bumps in the road for the comparison website recently. It says Moneysupermarket “should do better with communication; dare I say, hire an IR! [investor relations]” but rates it a buy with a 248p price target for shares that are 178.2p.

Sell

Laird

Flog shares in electronics group Laird, Investec advises. The broker said the timing and volumes of new products will be dictated by “customers and end user demand” but the strong share price recovery means Investec rates it a sell – although it raise its price target to 180p for shares that are 212.9p.

Hold

Capita

Hang on to Capita, Citi says . The broker has cut its rating to neutral because it does not see any reason for the share price to improve in the near term. Citi says it likes the UK outsourcing sub-sector but currently prefers Serco over Capita on valuation grounds. It raised the target price to 1,075p for shares that are 1,008p.

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