City stalwart hit by competition
CO-FOUNDED by Peter Hargreaves and Stephen Lansdown more than 30 years ago, Britain’s biggest direct seller of investment funds to private investors, Hargreaves Lansdown, is one of the City’s most inspirational success stories.
Floated at 160p in May 2007, the group joined the Footsie elite last year with a stonking valuation of £3bn and a share price of around 650p.
The stock now trades £2 lower amid growing competition fears and came under renewed pressure yesterday when Oriel Securities advised clients to reduce their holdings. The shares were sold down to 441p before closing 12.7p easier at 449p.
They have been on the retreat since recent news that Barclays Stockbrokers, the UK’S largest online execution- only stockbroker, had joined forces with Fidelity Fundsnetwork and launched a new and enhanced funds offering for investors.
Up and running from last week, Barclays clients have been able to access around 2,000 of the most popular funds online at barclaysstockbrokers.co.uk and in the region of a further 1,000 funds will become available during March.
There are no initial charges, no dealing commissions and no account charges when clients are fully invested in the Barclays Stockbrokers Funds market. Investors may also qualify for a 2012 loyalty cash bonus.
Oriel Securities reckon the shares look overvalued and says that 52pc of the shares held by the two founders – Peter Hargreaves (32.2pc) and Stephen Lansdown (20.1pc) – represents an obvious overhang risk, linked to how long they remain actively involved in the running of the business.
Financials helped drag the Footsie 19.58 points lower at 5,915.55 with sentiment not helped by members of the Group of 20 leading economies telling Europe that it must raise extra funding to combat the ongoing debt crisis if it wants more aid from the rest of the world. Wall Street lost 50 points in the early stages despite news that pending US home sales rose to a near two-year high last month.
HSBC declined 21.4p to 553.5p despite reporting a 15pc profits leap to £13.8bn, helped by strong growth from emerging markets, including mainland China, Hong Kong, Brazil and Argentina.
UK taxpayer partly-owned banks Lloyds Banking Group cheapened 0.83p to 34.9p and Royal Bank of Scotland 0.59p to 27.94p amid reports they could both be set to tap the second tranche of LTRO – the long-term refinancing operation – when it is made available by the European Central Bank tomorrow. Lloyds apparently could take £8bn and RBS a further £4bn, on top of the £4bn it is understood to have previously taken in December. India- focused power generator Essar
Energy blew a fuse and fell 18.4p to 107.6p after reporting core earnings fell 10pc in 2011, falling short of analysts’ forecasts due to weaker refining margins and depreciation of the rupee in the second half of the year.
Shrugging off recent management departures, Marks & Spencer rallied 6.7p to 360.1p. Broker UBS upgraded to buy from neutral and raised its target price to 410p from 325p.
Demand ahead of today’s full-year results helped hotels-to-costa Coffee shop group
Whitbread 17p to 1720p. World cruise travel group Carnival nosedived 31p to 1841p on nervous selling sparked by news that another one of its Italian cruise ships was in trouble in the Indian ocean. Costa Allegra, from the same fleet as the Costa Concordia, which capsized off the Italian coast in January killing 32 people, has apparently lost power following a fire some 200 miles southwest of the Seychelles.
Strong annual results lifted recruitment firm Staffline 3.5p to 207p. BATM, the lead- ing designer and producer of broadband data, eased 0.5p to 17.25p following in line results. The balance sheet is strong and the company has £30m in the bank
Domino’s Pizza cheapened 3.3p to 446.3p after Liberum Capital downgraded to sell and slashed its target price to 394p from 464p. The broker believes the market has not fully priced in the risks to the investment case. PLC profitability is at odds with franchisee margin declines, it said.
Confectionary company Zetar lost 9.5p to 176p on a profits warning, citing lower-thanexpected orders of Easter products from major retail customers over the last five weeks.
Despite a Peel Hunt sell recommendation following in-line results, support services group WSP added 9.5p at 261.5p. Pre-tax profits fell 14pc to £30.2m and the dividend was maintained at 15p. But the broker reckons WSP lacks meaningful exposure to the current prime areas of infrastructure investment and there are better growth prospects among the peer group.