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McClatchy-Tribune  06/19/2014 9:14 AM ET
Daily Mail, London, market report column [Daily Mail, London :: ]

June 19--Star fund manager Neil Woodford, the nearest thing to a household name in the City, today officially launches his CF Woodford Equity Income Fund.

He has promised his loyal supporters that the new portfolio will feature many of the names he has held over the past 25 years at Invesco. His new fund will be targeting a 4pc yield with aims to grow the yield to a 'high single digit'.

Woodford's Invesco Perpetual High Income Fund was the best performing fund in the equity sector for years under his management, turning a pounds sterling 10,000 investment into pounds sterling 230,000. His track record was exceptional.

It was therefore no real surprise to see after his shock decision to resign from Invesco to go solo investors withdrew an estimated pounds sterling 4.6bn from Woodford's fund as they awaited his new 'baby' to be given the green light. In the meantime, they have been allocating cash during an offer period.

Woodford has always taken a fancy to the tobacco sector and dealers yesterday said it was no coincidence to see both UK giants make good progress amid suggestions his new fund was active in the market. Bats was puffed up to 3578.5p at one stage before closing 2.5p easier at 3542p.

Imperial Tobacco rose 17p to 2656p. It recently announced its intention to float Logista, its wholly-owned distribution division, in Spain. The unit accounts for 5pc of group profits. Broker Panmure Gordon estimates the potential valuation range being pounds sterling 1.1bn to pounds sterling 1.5bn. Assuming Imps retains a 51pc stake, this would indicate potential cash generation of pounds sterling 540m to pounds sterling 720m. Woodford in the past championed pharmaceuticals when many other fund managers would not touch them with a barge pole.

Shire remained popular on persisting US takeover talk following a Reuters report that investment bank Citigate has been hired to man the group's defences against a possible corporate attack. As vague rumours of a possible blockbuster bid from Allegen did the rounds, the shares jumped 125p more making a two-day leap of 249p to 3785p.

Quietly firm trading conditions prevailed in London and the Footsie rose 11.79 points to 6,778.56 as dealers awaited the outcome of the latest two-day Federal Open Market Committee meeting. The Fed was expected to continue its tapering of its monthly bond purchases by a further $10bn to $35bn, but traders were more interested to hear any clues as to the timing of the first increase in the official fed funds rate. Wall Street closed 98.13 points up at 16,906.62. Superdry fashion company SuperGroup rallied 16.5p to 870p after Investec said the drastic 39pc fall since publication of disappointing fourth-quarter sales figures in early May has been overdone. Analyst Kate Calvert has a target price of pounds sterling 16 and expects full-year results on July 10 to reassure the market on the brand's longer term growth potential and opportunity to leverage its infrastructure.

A Shore Capital sell recommendation dragged Wm Morrison down 1.7p to 190.9p. The beleaguered supermarket on Tuesday announced a review of its store operations and 2,600 store managers are likely to lose their jobs. Analyst Clive Black is concerned about trading momentum. It will take some time for the new strategy to be assessed by customers as real or 'puff'.

FTSE 250 stock Croda International rose 9p to 2418p, seemingly unaffected by news that finance director Sean Christie is to step down from April next year.

Instrumentation and controls company Spectris firmed 9p to 2316p following its acquisition of Canadian company La Corporation Scientific Claisse, which manufactures and sells instruments that are used to prepare consistent and comparable samples for analysis across a range of sectors. A combination of bear closing and some brave buying in the wake of Tuesday's Capital Markets Day, helped Quindell touch 19p before closing 0.5p dearer at 17.75p. The accident prone shares were heavily sold again recently when the company was refused promotion to a full listing from AIM. Controversial boss Rob Terry will have plenty of questions to answer at today's AGM.

Reneuron, the stem cell treatment developer, edged up 0.12p to 3.02p following a trading statement. Although losses increased to pounds sterling 7.1m in the year to end-March, the company said it still had plenty of cash following its pounds sterling 23.44m fundraising in August 2013.

Profit-taking following excellent results from the long-awaited ruby auction left Gemfields, 2.62p off at 49.62p. The company sold 1.82m carats of rubies and corundum for an average price of pounds sterling 10.9/carat and a total revenue of pounds sterling 19.8m.

Circle Oil eased 0.38p to 22.12p following an operating update for its Moroccan assets.

___

Research from Capita Asset Services reveals investors have been filling their boots with shares over the past 12 months. Holdings in UK equities have reached pounds sterling 238.8bn, a post financial crisis record and only 3.5pc below the all-time record of pounds sterling 247.3bn attained exactly seven years ago in 2007. Capita expects record dividends of pounds sterling 11.3bn to be paid to private investors in 2014. Over the last seven years, private investors have reaped an astonishing pounds sterling 58.3bn in dividends.

 

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