Market Report: Carillion defies cynics with a reassuring update

Market report

Pick a contractor, any contractor, and Google will probably be able to find you a crisis like the one at Carillion
Pick a contractor, any contractor, and Google will probably be able to find you a crisis like the one at Carillion

There was no early Christmas present for the hedge fund scrooges hoping for a slip-up at Carillion yesterday.

The construction services firm, the most shorted stock on the LSE with almost 18 per cent of its shares out on loan to investors betting on a fall, defied the cynics with a reassuring update and £1bn in new contracts. The company, which tried and failed to buy larger rival Balfour Beatty last year, confirmed it is on track to meet its annual targets, much to the disappointment of short sellers, including BlackRock, the world’s largest asset manager. It is among 13 hedge funds that have short positions in Carillion, with concerns centring on its rising debts and slow profit growth. Liberum analyst Joe Brent said the reassuring update “may squeeze the bears”, hinting that investors might be pressured into closing their short positions. The shares rose as much as 5 per cent before finishing 0.8p cheaper at 301.1p.

By contrast, “going short” on Anglo American has proved a far more lucrative venture, especially for Odey Asset Management, which has been upping its wager against the embattled miner in recent weeks. The City still seemed sceptical, even after Anglo cut its dividend, with shares 14 per cent lower at one point.

They regained some ground later in the day to close 3.95p lower at 319.7p thanks to a commodities rally, which was not enough to prevent the FTSE 100 falling 8.54 points to 6,126.68. However, a 3.63p rise from Glencore to 83.08p was enough for Anglo to overtake its rival as the worst performing blue-chip stock of 2015, having crashed 73 per cent.

TV and film rights company Entertainment One, 23.2p better off at 164.1p, recovered from Tuesday’s drubbing as it reassured investors about its expensive-looking £285m debt refinancing, saying it is “appropriate for its strategic ambitions”.

On AIM, annual results from music-equipment maker Focusrite struck a bum note with investors, tumbling 31p or 16 per cent to 159p. Panmure’s George O’Connor was to blame as the tech guru cut forecasts after the euro’s slide, predicting that earnings will fall next year.

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