Top stock picker on the rebound
THE City’s top fund manager, Neil Woodford, is in need of a fillip.
His CF Woodford Equity Income Fund is currently sitting on a hefty paper loss on its 28pc stake in controversial US drugs firm Northwest Biotherapeutics and there is every chance the deficit could yet become even greater. So he will be keeping all digits crossed that today’s debut on AIM of Purple bricks, the online estate agency in which he holds a major shareholding of more than 25pc, proves to be a big success with buyers leaving the £1 flotation price streets behind.
Ubiquitous investment bank Zeus Capital has masterminded the flotation which will value Purplebricks at around £250m, which is remarkable considering just over a year ago the business was worth around £7m. Other major shareholders include Paul Pinder, former chief executive of Capita, and Errol Damelin, founder of payday lender Wonga.
Purplebricks allows homeowners to sell their properties for a flat fee of £665 plus VAT compared with an average sum paid to estate agents of more than £5,000 based on a typical commission rate of 1.8pc of a property’s value. The company recently began to market properties in Scotland, where it says traditional agents charge an average fee of 1.8pc of the total sale price plus VAT.
Business advisory firm Deloitte inform us that the 28 main market IPOs this year have generated an average return of 17.2pc. They have outperformed the Footsie by 21.2pc, a better return than last year when the 30 IPOs produced an average return of 12.4pc. An investment of £1,000 in each of the 28 IPOs is now worth £32,811, whereas a £1,000 investment in the Footsie at each IPO date would have fallen slightly to £26,867.
Expectations of new stimulus measures from the European Central Bank helped the Footsie rise 25.28 points to 6,420.93 and the FTSE 250 37.16 points to 17,553.92. Wall Street slumped on profit-taking ahead of Federal Reserve boss Janet Yellen’s appearance at The Economic Club of Washington DC, in what will be a closely followed speech ahead of her testimony in front of Congress today.
Bullish comments by US broker Morgan Stanley gave a tonic to US drug stocks.
Shire led the way with a gain of 109p to 4745p. Speculation has been rife that it will soon table an increased £22bn-plus, or £32-ashare, cash offer for Baxalta, the bleeding disorders and immune deficiencies specialist, having had an initial £19bn all-share offer rejected by the Baxalta board. Rumours now suggest it has turned its attention to US firm Radius Healthcare and an offer in the region of $95 a share is in the pipeline. GlaxoSmithKline put on 27p to 1378p which compares with Morgan Stanley’s target price of 1450p. AstraZeneca added 67p at 4582.5p, well below the US broker’s target price of £53.
Selling by tracker funds following the defence group’s relegation from the Footsie dragged Meggitt 12p lower to 375p.
Supermarket group Wm Morrison, 0.3p easier at 151p, and accident prone security firm G4S, 0.7p dearer at 232.7p, also drop to the FTSE 250 to be replaced by Worldpay, 5.25p better at 307p, DCC 40p higher at 5995p and Provident Financial, 13p up at 3613p.
Buyers were in the driving seat at the AA, 18.3p up at 296.2p, following reports that CVC, the private equity owner of Formula One, has acquired Carlyle’s stake in rival roadside assistance group RAC.
Carlyle bought the RAC from Aviva in 2011. Broker Liberum believes the CVC deal would imply a valuation of 433p per share for the AA.
UK insurer Saga shed 10p to 202.2p after major shareholder Acromas Bid Co. sold a 13pc stake at £2 a pop through Bank of America Merrill Lynch and JP Morgan Cazenove. Acromas will retain 32pc.
Penny share punters’ favourite African Potash lost 0.25p or 13pc to 1.65p. Shareprophets.com, the popular investment website, put the boot in following news that the company has borrowed £750,000 from Katrina Clayton, the wife of chief financial officer Neil Clayton. It called it one of the most expensive loans in history.
Katrina Clayton will apparently pick up a £60,000 arrangement fee on day one, then earn interest at 1.5pc per month over the nine months of the loan. That is another £99,375. So she will get back £159,375 over nine months, an annualised rate of more than 28pc.
A small placing would have been possibly cheaper, but then that would have required City support!
African Potash in August strongly denied it had any plans for a share placing at a significant discount to the current share price. Shareprophets.com believes the Clayton cash will only last three months before another fundraising will be required to keep the lights on. Infamous bear raider Evil Knievil is short at 1.8p. ÷ SHARES of IMImobile closed steady as a rock at 155p ahead of today’s interim results. The global technology company, which provides software and services, has a strong shareholder base led by Martin Hughes’ Toscafund with 27.8pc and Gresham House Strategic, 17.7pc. The half-year figures will have to come up to scratch or there could be possibly management changes in the medium term.