News Column

Daily Mail, London, market report column

February 14, 2014

By Geoff Foster, Daily Mail, London



Feb. 14--Shareholders of Avanti Communications should watch out, Evil Knievil is about.

As shares in the satellite operator were initially sold down to 209p before rallying to close 1.5p dearer at 221.75p, dealers heard that the Big Daddy of bear raiders, Simon Cawkwell, believes they will soon come down to earth with a big bump.

They are still light years below the pounds sterling 7-plus a share level at which they were changing hands towards the end of 2010,

Cawkwell is a legend in the City, making a small fortune over the years by taking out contracts to sell shares he does not yet own 'going short' in City parlance, in the hope the share price would fall.

Describing why he has sold Avanti in the wake of Wednesday's trading statement, Cawkwell told the Mail: 'Basically, Avanti is phoney. It is massively loss-making. Its reported loss of pounds sterling 25m would have been far worse if it were not for a one-off gain on a procurement settlement for a satellite.

'Also, foreign exchange gains were a major one-off benefit factor and costs were up again. Inventories were higher and there is no proof or reasonable expectations that things are going to get better.'

He added: 'The group's debt burden is by now probably insurmountable and a heavily discounted rights issue will be required in short order. Joe and Joan Public were sucked into the stock after respected former Diageo boss Paul Walsh became chairman and then bought a shed load of stock. They all followed him in but will rue the day.'

Avanti reported surging revenues at the half-way stage but revealed that profits fell due to one-off charges. Pre-tax losses grew to pounds sterling 25m from pounds sterling 13.3m.

Disastrous profit warnings from constituents Tate & Lyle, 126.5p down at 660p, and Rolls-Royce, 165p lower at 1045p, didn't do the Footsie any favours and it closed 15.61 points lower at 6,659.42. The FTSE 250 lost 49.79 points to 16,029.39. Wall Street recouped a 70 point fall to trade 31 higher in early trading. Early selling followed weaker-than-expected data on US consumer spending and a disappointing trading outlook from Cisco Systems which initially fell 4.4pc.

Biopharma company Arena was a major talking point on the Street of Dreams, the stock rising a further 2pc to $6.90 amid growing speculation about a possible bid from UK drugs giant GlaxoSmithKline, 2.5p better at 1653p.

Arena's fat-busting treatment Belviq was approved by the US Food & Drug Administration last June. Apparently, it works by selectively activating certain brain receptors that steer users toward less food consumption and promotes a feeling of being full. It is estimated that about 42pc of the US population may be obese by 2030, up from about a third currently. Globally about 500m are obese.

Word is GlaxoSmithKline is interested in buying Arena to bolster its presence in the market for weight-loss remedies. Should GSK make a move, Swiss-based drugs giant Roche could get involved too.

Undervalued or the best thing since sliced bread? Dave Page and Professor Jonathan Pitts, co-founders and respective 7.1pc shareholders in Actual Experience, last night must have toasted being left paper millionaires after shares of the software analytics company that helps solves digital glitches, staged a quite spectacular debut on the junior AIM market.

Introduced at 54.5p, shares of the company which was spun out of IP Group, 9.5p better at 196.5p, and Queen Mary University in London, rocketed more than 500pc to 280p.

Travel company All Leisure, which specialises in catering for the over-55s, fell 4.5p to 40p following a profits warning. It said that results for the full-year would be affected by one-off items resulting from operational and non-operational adverse factors, as well as the closure of its head office. The loss for the year will now be between pounds sterling 13m and pounds sterling 14m, compared to a pre-tax profits of pounds sterling 0.8m the previous year.

Nervous selling amid talk of an imminent announcement dragged Israel-based technology company Emblaze 15pc down to 38p.

Mining group New World Resources cheapened 5.25p to 45.5p on disappointing annual results which were hit by a weak coal price. The average price of coking coal over the period was euro 98 per tonne, a decline of 22pc, while the average price for thermal coal dropped 24pc to euro 56 per tonne.

After announcing a marketing and distribution agreement for its wound care product, Vashe, in select Middle East and North African countries, PuriCore jumped 5p to 45.5p.

Omega Diagnostics advanced 2.75p to 19.5p after the medical group passed a major milestone in developing its Visitect CD4 HIV blood test. It has completed the technology transfer phase for Visitect, which ensures the product can be rolled out commercially.

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Shares of AIM-listed Ab Dynamics, which makes robots to help test cars' braking and steering systems, rose 5.5p in thin trading to 156.5p. Buyers nibbled away following confirmation that Wiltshire Council has finally granted planning permission for its new factory, which will allow extra capacity for the manufacture of its state of the art automotive testing systems. November's peak was 193p.

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(c)2014 Daily Mail (London, )

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Source: Daily Mail (London, England)


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