Yesterday's trading: Flying Brands still withering

By GEOFF FOSTER FOR MAILONLINE
Updated:

 

How do you make a small fortune? Start with a big one. Ask ubiquitous Scottish entrepreneur Sir Tom Hunter.

Geoff Foster, Daily Mail City

Geoff Foster: Pessimism on bank stocks has started to recede.

His investments have taken a hammering during the mother of all bear markets and he must now sit back and be patient and wait for the worm to turn.

Hunter bought a 29.9% stake in Flying Brands, the Flying Flowers delivery-to-Gardening Direct mail order group, at 312½p a share in November 2006 via his West Coast Capital vehicle.

But since walking away from takeover talks with the company last November, he has had to painfully watch the stock wither substantially to a low of 25½p.

But suddenly the shares were smelling of roses yesterday, up 7½p to 38½p, after Flying Brands' chief executive Stephen Cook acquired a 12.48% stake at 50p a share from Channel Hotels and Properties.

Cook replaced Tricia Killen as chief executive in February following a shock profits warning the month before.

Hunter then slammed the management team for inaccurate forecasts and threatened to become a 'more active' investor. Cook was apparently shoed into the top job by Hunter.

Word is that green-fingered Hunter now effectively has control of Flying Brands, without having to make a bid. The loss-making firm has seen sales wilt as cash-strapped buyers picked cheaper bunches, but Hunter (and Cook) obviously sees some green shoots of recovery.

The fabulous Footsie flew 84.58 points higher to 4,052.98 and the FTSE 250 closed 115.38 points better at 7,224.76 as dealers heard that many fund managers are beginning to look on the bright side of life.

The latest Bank of America Securities-Merrill Lynch Fund Managers Survey for April shows that 26pc of respondents reckon the global economy will strengthen in the next 12 months, up sharply from a negative 24% in January.

Fund managers are now acting on the improving outlook and unwinding previously entrenched, bearish positions. Pessimism on bank stocks has started to recede.

Michael Hartnett, co-head of international investment strategy, said: 'The consensus has shifted from apocalyptically bearish to reluctantly bullish.

'But asset allocators are still underweight in equities, indicating they have yet to fully embrace the idea of a new bull market.'

Wall Street gained 95.81 points to 8125.43 after better-than-expected first-quarter figures from JP Morgan Chase and despite the fact US housing starts slumped sharply in March, signaling the world's biggest economy is still in the grip of a recession.

Reflecting the recovery in their investment portfolios after the Footsie's spectacular 15% rally from its March 3 low, Prudential jumped 31¼p to 394p and Standard Life 10.4p to 189.4p.

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After the latest British Retail Consortium survey for March had clothing sales showing their first annual improvement since May last year, Marks & Spencer advanced 16¼p to 324¼p and Next 62p to 1451p.

Rumours of a rights issue accompanied an early speculative 5p leap in Currys retailer DSG International before profit-taking left the close only ¾p dearer at 34¾p.

Precision instrument developer Spectris soared 45½p to 507½p after broker Bank of America Merrill Lynch said its rating could potentially double over the next 12 months.

Its target price is 750p. Stockbroker Blue Oar, soon to change its name to Astaire, edged up ½p to 5p after revealing it is mulling a 6p a share cash offer for financial services company Dowgate Capital, ½p dearer at 6¼p.

Top market-maker Winterflood Securities last night held its annual bash at the Andaz Hotel in Liverpool Street. No doubt the 'School Reunion' theme was a big success with not only clients but with former boss and 'headmaster' Brian Winterflood. Parent company Close Bros, which must be thankful for WINS storming performance over the past year or so, rose 10p to 600p.

AFC Energy, the low cost fuel cell company, jumped 1¼p to ⅛p on news that AkzoNobel has taken delivery of one of its fuel cell systems at its Bitterfield site in Germany. Computer services company Globo gained 1¼p at 9p following pleasing annual results. Pre-tax profits rose 36% to €2.86m and revenues leapt 63% to €17.9m.

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