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Harbinger of gloom for Inmarsat

Inmarsat dropped 39.5p before rallying to 642p earlier this week after New York hedge fund Harbinger Capital confirmed plans to sell half of its 28 per cent stake, ruling out a long-mooted takeover.

Harbinger, run by billionaire Philip Falcone, appointed investment banks Credit Suisse and UBS to sell a 14.1 per cent shareholding in Inmarsat at 630p, a bigger stake than the 10 per cent predicted by market watchers last weekend, sending investors running for cover.

The sale grosses the hedge fund around £410m, and a tidy profit considering Inmarsat's shares have soared from 350p in the last two years.

IC View

We recently questioned the valuation (Call time on Inmarsat, 9 Aug 2010) and even now the shares are trading on a 2011 PE ratio of 19 times. Support comes from a decent 3.9 per cent yield, but it may not be enough to halt further falls now buyout hopes have left orbit. Sell.

Last IC view: High enough, 741p, 9 Aug 2010

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