FTSE in-depth: BT declines on scrappy selling

By Geoff Foster for MailOnline
Updated: 03:19 EDT, 24 December 2009

Fans of BT shouldn't fret, the 4.3p fall in the share price to 137.5p was nothing sinister but just a result of the stock trading ex the latest 2.3p net dividend payment.

Geoff Foster: BT investor needn't have panicked.

In other words, if investors had bought the stock yesterday they would not have been entitled to the next dividend payment.

So they held off and a few scrappy selling orders left the telecoms giant languishing near the top of the biggest Footsie fallers.

BT has soared over 60% from the March low, and celebrated 25 years as a listed company on the London Stock Exchange in November.

The very same month interim results showed substantial headway in chief executive Ian Livingston's turnaround plan, as cost cutting delivered higher-than-expected earnings. The problematic Global Services division, which was the cause of two profit warnings in 2008, performed well.

BT's enormous pension deficit, which stood at £9.4bn at the end of September, is a major deterrent for many investors. But that hasn't stopped Henk Potts, investment strategist at Barclays Wealth, from making BT one of his top share tips for 2010.

Potts says the regulatory environment is easing, with some pricing power returning in key parts of the business, such as broadband. While funding for the pension deficit is still a concern, rising markets will be helping valuations. His fair valuation is 177p a share.

Some festive window dressing by fund managers ahead of the holiday break helped the Footsie trade within a whisker of its November year's high of 5,396. It touched 5,386.60 before drifting in thin trading to end the last full trading session before Christmas 43.72 points better at 5,372.38.

Wall Street upset the applecart for a short time, opening lower following surprise news that sales of new US homes fell 11.3% in November to a seasonally adjusted annual rate of 355,000 as a popular tax break for first-time homeowners was set to expire. On Tuesday the Street of Dreams had celebrated a big jump in sales of existing US homes.

Higher commodity prices attracted renewed buying of heavyweight miners. Eurasian Natural Resources climbed 33p to 901p, Randgold Resources 184p to 5,115p, Xstrata 29.5p to 1071.5p, Rio Tinto 80p to 3,296p and BHP Billiton 40p to 1,945p.

Balfour Beatty edged up 0.5p to 254p after being awarded a £100m Greenwich contract under Building Schools for the Future with VT Group.

Investec advised clients to buy Chloride following the group's completion of the acquisition of one of its French peers, Aees of Lyon, which focuses on the the energy and infrastructure markets. The broker's target price is 200p.

Karl Green, analyst at Altium Securities, ate copious amounts of humble pie as he apologised to clients, saying his move to buy support services group WSP in early October was a spectacularly bad call. The shares have underperformed by a painful 27% over the past three months and closed yesterday 6p down at 266p.

Nevertheless, Green is still convinced that WSP is undervalued. It has an excellent geographic mix of revenues, two thirds of which is outside the UK. It is split broadly 50/50 by public/private sectors, which suggests it should be nicely geared into the wider global economic upturn, while still benefiting from likely ongoing resilience in the global (ex-UK) transport sector.

Mariana Resources rose 1.25p to 17.25p after the AIM-listed exploration and development company, focused in Argentina and China. announced positive drill results indicating-potential for iron-oxide-copper-gold mineralisation at its Buenaventura and Perro Chico region in northern Chile.

Speculative Pangea DiamondFields firmed 0.1p at 1.38p after announcing the upgrade of processing facilities at its Cassanguidi project in Angola is now complete.

Despite a buy recommendation from broker Jefferies International and raised target price to 58p from 21p, shares of Aurelian Oil & Gas slipped 1.25p to 29.25p. Biotech company Nanoco improved a penny to 83.5p following news that the Universities Superannuation Scheme has acquired 9.4m shares, or 5.1% of the equity.

Central China Goldfields cheapened 0.25p to 2.425p after terminating a project in China. Jeffrey Malaihollo, managing director, and Ciceron Angeles, technical director, acquired 125,000 shares apiece at 2.44p a share.

Vyke Communications closed flat at 10.25p following a boardroom reshuffle which saw the appointment of Jorgen Peter Rasmussen as non-executive chairman.

Continuing its disposal of non-core businesses, Hunting sold its Energy France engineering subsidiary for £11m to a new company with existing HEF directors.

The shares lost 3.5p at 564p. Evolution remains fairly bullish about prospects. Growth should come from an increase in global exploration and production activities, while 2009's acquisitions should also make an impact on revenue and profits in 2010.