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FTSE in-depth: Safestore boost as investor sells

By Geoff Foster for MailOnline
Updated: 03:41 EDT, 21 January 2011

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More often than not when a company's biggest shareholder decides to jump ship, there may be trouble ahead. But not as far as Safestore is concerned.

Geoff Foster: The index fell away, making a two-day relapse of 188.4 points or 3%.

Britain's largest self-storage group announced that private equity group Bridgepoint had placed its entire 17.9% stake, or 33.7m shares, at 130p a pop, via brokers Citigroup and Evolution Securities and the shares rose 2.25p to 139.75p.

Espirito Santo, which incorporates broker Execution Noble, immediately advised clients to buy, saying the sale increased the free float of the stock to 75% which creates a classic re-rating opportunity.

Safestore's non-executive director Alan Lewis, who is also a partner at Bridgepoint, offered his resignation following the disposal, but it was declined by the Safestore board.

Steve Williams retires as Safestore's chief executive in March and will be replaced by Peter Gowers, the former boss of the Asia Pacific unit of Intercontinental Hotels. Espirito is not anticipating any fundamental strategic changes to what remains a well-run operational business.

Safestore turned a £9.4m loss in 2009 into a £29.2m profit in 2010 as lettings soared thanks to the rise in homeowners selling up before buying a new home.

Stronger-than-expected Chinese growth and inflation figures revived concerns that the world's top commodity customer could be about to raise interest rates again.

It put the boot into the Footsie as it gave those doubters who believe a correction was long overdue an excuse to sell stock. The index fell away to finish 108.79 points lower at 5,867.91 making a two-day relapse of 188.4 points or 3%.

Wall Street didn't help by initially trading 62 points lower despite impressive fourth-quarter figures from Morgan Stanley. Chinese rate worries dragged metal prices and heavyweight miners lower.

Silver miner Fresnillo led the retreat at 1346p, down 84p, while African Barrick Gold lost 29.5p to 518p, Kazakhmys 84p to 1545p, Xstrata 74p to 1388.5p and Anglo American 152p to 3067p.

JP Morgan Cazenove upgraded National Grid to overweight from neutral and shares of the utility sparked 8p higher to 539p. The Grid underperformed the market by 16% in 2010 and has begun 2011 poorly. The broker believes the market has become so focused on the risks facing Grid that it has lost sight of the opportunity. Grid is a unique investment case and a genuine structural growth story.

Loss-making online grocer Ocado attracted renewed support amid continuing industry gossip about a possible bid from Wm Morrison.

The close was 6p up at a post-July flotation peak of 213.8p. Ocado reported a 26.7% rise in December sales.

Vague private equity takeover talk lifted technology group Spirent Communications 2.6p to 142p. Blackrock is the group's biggest shareholder with 12.3%.

Small buying on the back of a bullish trading update left Judges Scientific 42.5p up at a record 447.5p. Chief executive David Cicurel said robust trading evident in the first six months of the year continued into the second half and produced satisfactory order intake, sales, margins and cash generation. Earnings per share for 2010 will therefore be materially above market expectations.

Inkjet printing technology company Xaar put on 3p to 245p after reporting that trading was significantly ahead of last year and profitability is expected to be slightly ahead of the board's expectations.

Recently buoyed by rumours of a bid from Intel, IQE cheapened 1.75p to 50.5p on profit taking despite a strong trading update. Investec raised its target price to 59p from 45p.

Acquisition news helped Neovia Financial improve 1.75p to 62.25p. It has acquired Optimal Payments, an online payments business, for up to £31m, creating a significant international player in alternative payments. Shop broker Daniel Stewart has a target price of 80p and estimates the deal will enhance adjusted earnings per share by more than 20pc in 2011.

Publishing Technology rose 5p to 56p following an upbeat trading statement. Broker Arbuthnot reiterated its strong buy recommendation and target price of 120p after taking note of increased contracts for its publishing software in December and an improved cash position.

Further consideration of Wednesday's placing of a large stock overhang helped Scotgold Resources add a penny at 6.25p. 1spatial, a provider of location-based information, soared 7p or 17% to 47p following a positive trading update. Over the past three months the company has secured a number of contracts in the National Mapping Agency arena and public sector.

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