Market report: Friday close
It looks like another big payday for hedge fund operator and activist shareholder Martin Hughes, known to his mates in the City and on the golf course as 'the Rottweiler'.
Today, shares in one of his favourite companies, Amec, put on 20½p at 741p, netting Hughes and his Toscafund a paper profit of almost £9.43m. At the last count, Hughes owned 37.69m Amec shares, worth £279m, or 11.39% of the company, making him its second-biggest shareholder.
He is already sitting on a nice profit from his original investment in the FTSE 100-quoted oil equipment and services company, for which he is reckoned to have paid between 300p and 400p a share.
The latest spike in the Amec price came after UBS raised its rating on the shares from neutral to buy because it reckons they look cheap. They have fallen 10% in sterling terms, underperforming the likes of UK oil service peers Petrofac, up 45p at 632p, and Wood Group, 10p firmer at 415p, by about 16%. They are down about the same amount again relative to the European oil services sector.
UBS says the drop is unjustified because cash-rich Amec has delivered with two modest acquisitions, and could significantly benefit if sterling weakens relative to the dollar. Its price target remains unchanged at 875p. Brokers are hoping some of the performance by Amec will rub off on other companies Toscafund is invested in.
That includes housebuilder Redrow, down 4¼p at 285¾p, where at the last count it owned 26.49m, or 16.56%.
Another assault on the 6000 level ran out of steam. Hopes of another early mark-up on Wall Street this afternoon took a hit after General Electric downgraded its first-quarter profit numbers. The FTSE 100 index fell 69.6 to 5895.5.
Among the losers was BAE Systems, down 24¼p at 475p, after the High Court ruled that the Government's decision to drop a corruption investigation involving the company was illegal.
Speculative buying provided a further boost to British Energy, up 1½p at 741p. It is now thought France's EDF is set to make an offer worth 700p a share and is ready to see off opposition from Germany's power generator RWE.
HSBC has begun coverage of Game Group, down 6½p at 227¼p, with an underweight rating and 168p target because it thinks the stock is trading on an unjustified premium.
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The underlying hardware cycle remains the key driver of industry sales and profit growth.
But the broker reckons peak cycle profits in full-year 2009 look set to be followed by a reduction in UK core and group operating profits in 2010. Game's premium sector rating is now no longer justified.
Trading Emissions, down ¼p at 118¼p, said it recently made an all-share, nil premium approach for renewable power producer Econergy International, up 1½p at 30½p.
Only yesterday, Econergy's 18.3% shareholder Consensus Business Group said it was reviewing its options.
Chief executive Stuart Green has bought 100,000 shares in his Zoo Digital Group, ¼p better at 17p. That lifts his total holding to 2.85m shares, or almost 16% of the company.
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MONDAY'S AGENDA
• March's producer prices figures - better known as factory gate inflation - are expected to fuel concerns over rocketing costs. Office for National Statistics data showed the annual rate stayed at its highest for 16 years in February as producers struggled with the soaring cost of raw materials. The Bank of England's monetary policy committee will have had a peek at the figures during this week's interest rate setting meeting to determine how aggressively rates could be cut.
• Sage, Britain's biggest listed software company, issues a trading statement. Investors will be hoping for good news on its bid to turn around its struggling US division. A new chief executive for the division, Sue Swenson, has finally been appointed, after months with the top post unfilled.
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