There was a mixed performance from the housebuilding sector yesterday after a leading broker drew attention to recent share sales by industry insiders.
Unimpressed by the numerous bid stories doing the rounds at the moment, several of the sector's biggest names have been offloading stock in the past week, according to Man Securities.
Last Thursday, Tony Pidgley, the boss of Berkeley Group and the man who correctly forecast the last housing market crash, sold 1m shares at £11.65. Before that Peter Johnson, the outgoing chief executive of George Wimpey, offloaded 180,000, alongside two other board directors who sold 95,000. If that were not enough, then seven directors at FTSE 100 housebuilder Persimmon also disposed of stock last week, although the company claims this was to cover tax liabilities arising from the vesting of share options.
As such, Man thinks it might be time to "short" the housebuilding stocks, which have been among the market's best performers in the past year. Heeding that advice, shares in Crest Nicholson fell 20.5p to 550p, while Persimmon eased 21p to £13.90 and Berkeley shed 16p to close at £11.47. However, George Wimpey mysteriously bucked the trend, rising 13p to 578p.
In the wider market, leading shares staged a late rally to close the session almost unchanged. Boosted by strength in the telecoms sector and a solid opening on Wall Street, the FTSE 100, which hit 5,956.7 early in the day, closed 0.4 points lower at 5,991.3. The Anglo-Dutch steel group Corus, up 9.5p to 94p, was the best-performing blue-chip stock, excited by reports that it has held merger talks with Russia's Evraz Group.
Elsewhere, the FTSE 250 slipped 4.9 points to 9.810.1, while the FTSE Small Cap index fell 39 points to 3,573.4.
Aviva was among yesterday's biggest FTSE 100 fallers. Its shares fell 18.5p to 830p on concerns it may make an increased offer for Prudential, off 2p at 741.5p, and a bearish note from Merrill Lynch. Cutting its rating to "neutral", the US broker said Aviva shares, which have risen 20% in the past two months, were now fairly valued and that the Prudential merger proposal could be seen as an admission of weakness. "The approach to Prudential," the analyst David Nisbet said, "can be interpreted as an admission by Aviva that it feels the need to improve the medium-term outlook for its sales and earnings growth."
Other fallers included Northern Rock, which eased 10p to £11.58 as Citigroup placed 2.7m shares at £11.07, and Hanson, which slipped 1p to 777p as takeover speculation cooled. After the market closed, John Brady, a non-executive director, declared the purchase of 5,000 shares at 791p each. Traders said a director would not be acquiring stock if the company were in takeover talks.
On the upside, WPP Group improved 10.5p to 685p on the back of a Citigroup "buy" note. Setting a 745p target price, up from 645p, Citigroup said the outlook for the advertising group in 2006 was bright. Meanwhile, Rentokil Initial advanced 3.75p to 158.25p after UBS set an increased price target of 166p. "With cash flow and dividend yield supporting the share price, the downside looks relatively limited, while potential for recovery in 2007 and further restructuring could improve valuation," the Swiss broker said.
In the FTSE 250, Unite Group, the NHS and student accommodation provider, was a top performer. Its shares rose 11p to 425p after Merrill Lynch upgraded to "buy", citing the fact that Unite trades at a discount to its 2007 net asset value estimate of 482p.
WH Smith faded 5.25p to 424.75p following a warning from John Menzies (off 69p at 530p) that trading at its news distribution business had slowed significantly this year. WH Smith also has a big news distribution division, which is rumoured to be up for sale. Commenting on yesterday's news from John Menzies, the Dutch bank ABN Amro said: "This looks like a market rather than company specific issue and therefore should have read across to WH Smith, where we forecast news distribution to contribute £34m (post-pension) of the £77m group profits in 2006."
Among small caps, TTP Communications took the wooden spoon. The mobile phone software developer dived 6.25p to 15.75p on news that full-year figures will fall short of City forecasts because TTP failed to land a big contract before the end of its financial year.
Rumours of a bid approach excited the aggregates group Ennstone, which rose 4.75p to 52.25p after heavy trading of 5m shares. Southampton Leisure, the parent company of Southampton Football Club, marked time at 45p despite the appearance of Sarwan Singh on its share register with a 3.5% holding.
Of new issues, Sandvine Corporation, the latest telecoms equipment company from the stable of Welsh billionaire Terry Matthews, made a strong debut. Placed at 75p, Sandvine finished at 100.5p. Elsewhere, ParOS, a controls and automation group, rose 0.25p to 3.75p after completing its move from Ofex to Aim.
NSB Retail Systems eased 0.25p to 34.5p after a seller, rumoured to be Eaglet Investment Trust, offloaded about 15m shares.
C&W chatter
Cable & Wireless provided the speculative focus in the Square Mile yesterday. Over 6% of the troubled telecoms company changed hands as its shares rose 6.75p to 112.75p to secure second spot on the FTSE 100 leaderboard. Two stories were doing the rounds, neither of which cut much ice with market professionals. First there was speculation that Vodafone might be interested in C&W as a way of breaking into fixed-line telecoms. Once that tale was shot down there was talk C&W could be a target for BSkyB. The satellite TV company recently moved into the broadband market with the acquisition of Easynet. Fans of this story cited the fact that Easynet's network only covers 20% of Britain. However, with a market value of £2.5bn, C&W would be a huge and risky acquisition for BSkyB.