Stephen Peak, manager of Henderson's UK Alpha fund - which is about to merge with its UK Growth fund - admitted over lunch that he had bought BP shares last week. He also said that he would buy more if the price fell further. Presumably, he found president Obama's colloquialisms compelling. If BP was a growth stock at 450p, it had a lot further to rise at 391p.
In fact, BP looks likely to take on a number of other classic growth stock characteristics in the coming days and weeks:
● No dividend - political pressure from tough-talking Washington ass-kickers now makes the suspension of the next BP dividend a lot more likely
● Untried technology - any rise in the BP share price now depends almost entirely on the success of the lower marine riser package (LMRP) containment cap, and two relief wells, in increasing the number of barrels of oil collected per day from 15,000 to pretty much all of it.
● Legal challenges - investor confidence in the long-term prospects for BP’s share price, and future dividends, is only likely to return once the outcome of ownership disputes and other US lawsuits is known.
Some value fund still managers see too much risk in these unknowns, even with the shares trading on a trailing 12-month yield of 9.49 per cent and a price/earnings ratio of 5.54. But it's perhaps no wonder growth fund managers feel more comfortable taking a punt. BP now looks an awful lot like an early-stage technology or biotech start up.
The only difference is that we know its product works - and that there's huge demand for it.
