Yesterday's Trading: Wray of hope for Alliance

By Geoff Foster for MailOnline
Updated: 03:08 EDT, 8 July 2009

Entrepeneur Nigel Wray was once described as Britain's Warren Buffett.

Yesterday's trading: Geoff Foster rounds up the need-to-know from Tuesday's trading

The former share tipster turned merchant banker, and owner of Saracens Rugby Football Club, still has a City fan club.

He has wheeled and dealed in the property, media, leisure and communications sectors over the years.

But it is his interest in a £26m drugs tiddler which continues to create considerable interest.

Wray in May increased his stake in medicines supplier Alliance Pharma, 1p dearer at 16p, by a further 1.8m shares to 10.3%.

It helped to further raise the company's profile and prompted conspiracy theorists to believe that something corporate must surely be afoot.

Specialist healthcare investor MVM's acquisition of a 9.3% stake also raised eyebrows, particularly as it is the only investment it owns in a quoted company. Apparently, it has pledged to lead equity fundraisers for Alliance's future product acquisitions.

Clearly Alliance, which owns or licences 35 prescription brands, has plans to grow a lot bigger or get swallowed by a major drugs company. And that's why Wray and MVM have got involved.

Alliance yesterday revealed that trading has been strong with half-year sales up 33pc at around £13.2m. Pre-tax profits are expected to be not less than £2.7m.

And the good news for all shareholders is that the company plans to commence dividend payments in early 2010.

Heavyweight stocks found the going tough before and after Wall Street fell 90 points in early dealings on growing concern that the crucial second-quarter earnings season will disappoint. Aluminium giant Alcoa kicks it off today. The Footsie lacked inspiration and lost a 55-point gain to close 7.91 points lower at 4,187.

International bank Standard Chartered rose 21p to 1160p as Goldman Sachs upgraded to buy to reflect the group's Asia-centric geographical exposures and wholesale banking focused business mix (70% of 2008 group operating profit), which the broker believes are attractive in the current environment.

William Morrison firmed 2.75p to 243p after clients of Bank of America/Merrill Lynch filled their trolleys with stock after the US broking giant upgraded to buy. It said the stock has been oversold and has underperformed the food retailing sector by 12% over the past three months. The stock retains its strong defensive credentials.

Talk of a pending bullish circular lifted support services group Bunzl 11p to 524.5p.

Continuing to reflect competition worries and rumours of further job cuts, shares of the London Stock Exchange relinquished 12.5p more to 640p.

Aberdeen Asset Management, which is believed to be stalking Foreign & Colonial, added 4.5p at 129p.

Recruitment firm SThree climbed 11.75p to 172.75p on a reassuring trading statement. The company has reduced its headcount by about 25% during the first half of the year due to difficult trading conditions and its gross profit for the period fell 9% over last year.

Staffline added 5p at 44.5p after stating that trading performance in the first-half has been in line with management's expectations. Borrowings have declined by £1.8m to £4.3m. Altium says the shares are cheap and has a target price of 75p.

Marketing services company Creston edged up to 65p on news of a successful placing with institutional investors of 5.576m shares at 60p to raise £3.3m. Investec is bullish and says the fund raising implies some security against seasonal working capital flows and should also allow protection against any unforeseen client issues such as bankruptcies.

A positive trading update helped Quadnetics rise 8.5p to 151p. The developer and designer of advanced CCTV and networked video systems said trading in the second half was substantially stronger than the first half and underlying results for the full year will be in line with current expectations. Brewin Dolphin raised its target price to 165p from 125p.

Omega Diagnostics improved 1.25p to 25.25p following pleasing annual results. The medical diagnostics company reported turnover up 56% to £5.4m and 20% higher on a like-for-like basis. Gross profit jumped 76% to £3.3m and cash in the bank stands at £600,000. Cenkos has a 12-month target price of 44p.