Alliance activist builds a stake in another target
Activist investor group Elliott Advisors may have set its sights on a new target. the hedge fund firm known for shaking up underperforming trusts has built a 5pc stake in British Empire Trust.
Elliott has held a significant stake in rival Alliance trust, where it has fought to improve corporate governance and investment returns. its influence led to a reshuffle of the trust’s board and the resignation of its chief executive.
British Empire trust is another underperformer. the trust, which aims to provide returns by investing in undervalued companies, has returned 8.6pc over the past five years compared to an average return among rivals of 41.3pc in that time.
Numis said Elliott holds a £32m stake in the £774m trust through a derivative contract. the broker said the pressure is now on the managers of British Empire to deliver strong performance to provide an exit point for Elliott. Numis said: ‘British Empire has an interesting and differentiated mandate but its value style has been out of favour and its exposure to Asia, emerging markets and commodity stocks has not been helpful.’ Yesterday shares in British Empire slipped back 0.1pc, or 0.5p to 508p.
Hostelworld bucked the trend of the rest of the troubled travel industry after a vote of confidence from analysts.
Numis raised the hostel booking website to a ‘buy’. it was a welcome boost for the portal, which last month saw its shares fall by 29pc in one day as it revealed terror attacks had hit bookings. in an annual meeting statement the group said that average booking values had been lower and the outcome for the year depended on a recovery in European destinations over the summer. Yesterday shares gained 14.1pc, or 18.5p to 149.5p. Moneysupermarket investors sold in their droves after Barclays downgraded the stock and cut its target price from 390p to 260p. in a note the broker said the outcome of the referendum and a possible forthcoming recession added one concern too many about the business.
it said: ‘the layers of uncertainty in the story have been building in the last nine months, most notably from elevated competition.’ shares fell 11pc, or 30.2p to 244.8p.
On the FTSE 100 (down 0.84pc, or 55.57 points at 6522.26) oil and mining companies dominated once more. Fresnillo topped the board, gaining 7.7pc, or 135p to 1895p.
At the other end of the index, house builders crumbled on poor construction figures.
British Land was the biggest faller of the day, losing 7.1pc, or 43.5p to 565p.
Marks & Spencer slipped 5.1pc, or 16.3p to 303.8p. investors are jittery ahead of the retailer’s first quarter trading update due this thursday. Both Deutsche Bank and investec cut their rating on the stock from a ‘buy’ to a ‘hold’. Recent bad weather is expected to bring more woe to the struggling fashion side of the business. Low & Bonar went higher on news that the materials company has agreed to dispose of its artificial grass yarns production business. Low is set to sell the business to Mattex Group, which is a world leader in grass yarn, for around £22.6m.
the deal, which is expected to complete by the end of August, does not include Low’s factory in Dundee. Low said that despite extensive restructuring in recent years, returns from its grass yarn business had been low compared to other areas of the group.
the proceeds from the sale will be used to reduce borrowing and provide flexibility to fund other opportunities. shares rose 7.1pc, or 4.25p to 64p.
TP Group added almost a third to its share value after winning a contract with the Ministry of Defence. the contract, once finalised, would be for an initial period of seven years with the possibility of being extended for a further three years, and is worth up to £27.8m over the period. it relates to submarine air purification. tP said it expects the contract to commence early next year. shares rocketed 35.7pc on the news, gaining 1.25p to 4.75p.