American investor with fearsome reputation buys into Canary Wharf

Shares in Canary Wharf Group received a much needed boost yesterday after it emerged that Michael Price, the respected American investor, had snapped up 3 million shares in the UK property firm.

MFP Investors, a secretive private fund said to consist largely of Mr Price's own fortune, bought 2 million shares at £1.74 and a further 1 million at £1.55 – giving it a 0.5 per cent stake in Canary Wharf.

Canary Wharf had to disclose the purchase since Mr Price is also one of its non-executive directors. He has been on the board of Canary Wharf since March 1999.

Shares in the property firm, which collapsed last week after it warned vacancy levels could rise much faster than expected, closed up 4.9 per cent, or 7.75p, yesterday at 167.25p.

Mr Price, who built a reputation for stock-picking by investing in out-of-favour stocks, was once dubbed by Fortune magazine as "the scariest S.O.B. on Wall Street". The phrase "Mr Price is on the line" could make a chief executive break out into a cold sweat, Fortune said.

"When he buys stocks then US investors definitely sit up and listen ... his reputation is huge," said one trader yesterday, adding that Mr Price was particularly well known as a "value investor and for buying companies when they have been through the wringer".

Canary Wharf, which owns the giant office complex in London's Docklands, admitted last week that some of its letting agreements allowed occupiers to return parts of their buildings for five or ten years through put options. The warning, which sent Canary Wharf shares crashing 22 per cent in a day, infuriated investors and analysts. They believed that the information should have been disclosed to the market sooner.

The property firm, whose shares fell further after they were downgraded by brokers, had previously claimed to be resilient to recession because tenants sign up for 25 years. It said last week, however, that its vacancy rate could jump from 6.7 per cent to 11 per cent over the next two years.

Analysts at Deutsche Bank downgraded their recommendation on the stock yesterday to a "hold" from a "buy", and cut their target price on the shares from 360p to 160p.