Yesterday's trading: Time to build up Wimpey stock

By Geoff Foster for MailOnline
Updated: 02:30 EDT, 8 August 2007

Martin 'Rottweiler' Hughes, the activist hedge fund manager who runs the hugely successful ToscaFund, has a big City fan club. The former Laing & Cruickshank banking analyst is said to have taken home a cool £51m last year and those investors who followed him into Amec and Manganese Bronze from the word go, have made a small fortune.

He is without doubt a man to follow. Yesterday, the ubiquitous trader shrugged off market concerns about the US and UK housing market and bought 47.5m shares, or 4.1%, of Taylor Wimpey. Shares of the biggest British housebuilder and general construction firm closed 2¾p better at 342½p. Shareholders should sit tight for what should be an exciting ride in the coming months.

For a start, tracker funds should soon be filling their boots with stock ahead of the group's promotion to the Footsie on September 12. The £5bn merger of Taylor Woodrow and George Wimpey effectively gives it an automatic entry into the elite index to join other housebuilders Barratt Developments, 13½p up at 942½p, and Persimmon, 34p better at 1198p.

Hughes is obviously relaxed about the deterioration in the US housing market and is confident that Taylor Wimpey's management will see the group through trying times.

Earlier this month, Taylor Wimpey announced a £750m share buyback and said it was making excellent progress, although the market was likely to be 'more subdued' in the second half as recent rate rises kick in.

Better-than-expected interim results from international bank Standard Chartered (68p up at 1638p) and insurer Standard Life (11p higher at 326p) gave dealers in London an additional lift after Wall Street had jumped 281 points overnight for its biggest one day gain since June 2003. The Footsie marched 119.7 points forward to 6,308.8 as the Dow Jones recouped an initial 106 point deficit to trade 20 points higher.

Speculation was rife that the Fed would keep interest rates on hold at 5.25% but say that credit market losses could slow economic growth. If so, that would reignite talk that Central Bank will soon lower borrowing costs.

Reports of a pending bullish circular helped Capita, which collects the London congestion charge fee, rise 39p to 748p.

Currently embroiled in a battle for control of Dutch bank ABN Amro, Royal Bank of Scotland added 20p at 589½p. Mike Lenhoff, equity strategist at Brewin Dolphin, says the banks should be bought on yield considerations-RBS has a forecast net yield of 8.3%. Buying ahead of today's first-half figures left Royal & Sun Alliance 45/8p better at 136p. First-half operating profits are expected to fall to £352m from £416m. Analysts will also be keen to hear about potential UK flood losses.

Rolls-Royce improved 3p to 504p on turnover of 25m amid vague rumours Chinese investors are looking to acquire a strategic stake in the British aircraft engine maker. China has plans to build no less than 180 airports over the next ten years and many aeroplanes which will land and take-off from them will no doubt be powered by Rolls-Royce engines.

At the 2007 Paris Air Show, Rolls-Royce won a record £7bn of orders from clients, including the largest single order in the company's history for £2.8bn for the new Trent XWB.

Support services group Mouchel Parkman soared 59¼p to 418½p as analysts gave the thumbs up to its £32.2m acquisition of Hyder Business Services from Terra Firma. HBS is a business processing outsourcing and information technology company which operates solely in the UK public sector. Investec upgraded to buy from hold, calling it a very sensible deal.

Property developer Minerva jumped 23p to 278¼p as punters responded to revived takeover gossip. Fund manager Rathbone Bros, which is strongly rumoured to be up for sale, rose 76p to 1354p.

DCD Media closed at 81½p following a placing of 10.6m shares at 80p a share in a 100-for-1 share consolidation. Cash raised helps fund three acquisitions in the independent television production sector. Hire purchase company Davenham held at 330½p despite ACP Capital's acquisition of 29.2% stake.

In the dog-house last week after bid talks with a private equity suitor were terminated, software group Civica rallied 8¼p to 226p on contract news.

It has signed two significant contracts with Sheffield City Council and Essex County Council in its expanding education business, amounting to almost £50m over the next ten years.

• Following Monday's successful Aim debut at 20p, shares of Welsh coal mining company Energybuild attracted another good turnover and closed at 22½p. The company raised £10.6m and will use the cash to develop the Aberpergwm and Treforgan underground coal mines in the Neath and Dulais Valleys of South Wales. It aims to be producing 440,000 tons of coal per annum within three years and 770,000 within six years.