Shares in Kurdistan-focused Gulf Keystone Petroleum (GKP) are notoriously volatile. In large part that can be put down to its enthusiastic following among retail investors. Another important factor has been the long-running speculation that it could be the target of a take-over bid. Speculation in that regard was stoked last year by a court ruling which confirmed its ownership of the giant Shaikan field. More recently, just last week in fact, its founder Todd Kozel's decision to step aside was seen by some as laying the ground for an acquistion.
Kozel, who has been the focus of investor ire in the past, however, is staying on as executive director. Another three non-executive directors on the other hand did leave. That follows the exit of the Finance Director, last June, which should be seen as a red flag. "Even at these low levels we remain cautious," says The Sunday Telegraph's Questor team, which has a 'sell' rating on the stock.
The year-to-date has been quite choppy for those investing in homebuilders. First came the risk that the Chancellor might announce measures to curb rising house prices in the Budget. That was followed by Governor of the Bank of England Mark Carney's announcement of a cap on home loans and tougher checks. However, the sector received a boost from his remarks to the effect that the central bank is not looking to curb house prices directly. As well, more draconian measures had been expected.
As the sector's companies enter the period when they update investors focus will be on forward sales, average selling prices and their thoughts on what the impact of an interest rate hike might be. Despite all the uncertainty over interest rate rises the sector continues to be ahead of the benchmark and the issue of limited supply remains. Hence, and for those investing for the long-term, Questor continues to recommend a 'hold'.
The outlook is quite positive for the maker of nutrition supplements for athletes Science in Sport (SIS). Perhaps the best endorsement is the fact that its products are used by a wide assortment of professional athletes, including 60 per cent of the cyclers in the upcoming Tour de France. To take note of as well, its products are scientifically researched, giving it an edge over rivals. Just as significantly, the firm is planning to expand internationally and broaden its product range. The sports nutrition market in the UK has a value of £400m but the worldwide figure is £29bn.
Yes, that requires making investments, hence the £2m share placing last April. Yet there are no plans for further cash calls. Chief Executive Stephen Moon is ambitious and the company is growing qucikly so the shares should rise. The possibility of a take-over from a larger rival in a couple of years' time also exists, writes The Financial Mail on Sunday's Midas column.
BUSINESS PRESS HEADLINES:
Interest rates are likely to hit 5 per cent within a decade, according to the outgoing Bank of England deputy governor for monetary policy. Sir Charlie Bean said it would be "reasonable" to expect borrowing costs to return to pre-recession levels in the long term – between five and 10 years. - The Guardian
Income tax and national insurance will be merged under plans being lined up as a key element of the next Conservative manifesto. George Osborne came “within a whisker” of implementing the plan in the budget and is now looking again at the policy for the general election. - The Times
European countries have warned David Cameron that his threats about the British people voting to leave an unreformed EU may backfire, undermining the Prime Minister’s hopes of winning major concessions. Diplomats from countries sympathetic to Britain have told the Foreign Office there will be a limit to sweeteners the Prime Minister can win before putting his new deal to voters in a referendum promised for 2017. - The Independent
One of Britain’s biggest institutional investors is telling companies that it wants them to use their cash to invest in the real economy rather than indulge in “fundamentally wrong” share buybacks. Nigel Wilson, the Chief Executive of Legal & General (LGEN), said that he disliked companies deploying excess capital to hoover up their own shares because such financial engineering was both “unfair” and generated “illusory as opposed to real economic value”. - The Times
Private-equity-backed flotations have risen to their highest level of all time as buyout groups rush to take advantage of London’s revived equity market. Private-equity groups across Europe have launched 31 flotations, worth €33.4bn (£26.7bn), in the first half of this year, according to figures from the Centre for Management Buyout Research. The news comes as private equity is under renewed scrutiny from investors after floats backed by some of Europe’s biggest buyout firms have slumped in value. - The Daily Telegraph
Supermarkets are losing their grip as the dominant destination for grocery shopping in the UK, with sales from convenience stores, discounters, and the internet likely to be larger within five years. According to new data from industry body IGD, which lays bare the pressure on the “big four” supermarket chains, sales from supermarkets and hypermarkets will fall by 4 per cent over the next five years despite a 16 per cent rise in overall grocery sales. This means that, for the first time, sales from convenience stores, discounters and the internet will overtake supermarkets and hypermarkets by April 2019. - The Daily Telegraph
