Cleaning up with Allied Carpets

Share sales by directors have been remarkably slack over the week just gone, but two deals stand out. The first is the decision by finance director David Pout at Allied Carpets to sell 18,390 shares at 250p each. The deal still leaves him with a 478,306-share stake, so it is almost a drop in the ocean. But it could augur that the days of high growth are receding. What better time to lighten one's holding than when cash tills are heaving with the sound of windfalls?

At Land Securities, a similar rationale may be at work for executive director Keith Redshaw, who sold 33,500 shares for 942p each, a hefty dent to his original stake, which was cut back to 24,236 shares. Land Securities has been in the news recently, buoyed by a decent set of figures and much talk of rising yields. Again, what better time to reduce exposure, while there is still plenty of froth in the property market, but interest rates look set to rise for at least the next year, cutting any bull run in property shares dead in its tracks?

The debate about where the FT-SE is headed, as the market drifts towards summer torpor, remains unresolved. However, as one old hand told me the other day, no market suffers a major decline unless everyone is convinced that it can only go higher. As was the case, he points out, shortly before the 1987 crash.

There are plenty of doubting Thomases around arguing that the market is overheated and overvalued and can only go down. The paradox here is whether that means we are all protected from the worst because a handful of commentators are urging caution? If that were true, it would be wise to wade in further, but I suspect few people would be inclined to tempt fate by doing that.

Defence is a difficult topic for many armchair investors to grapple with. Any defence enthusiast must follow the debates in far-flung countries, as well as trying to read the political runes at home. GEC, as the heavyweight in the sector, has had little to show investors for many years. The defence engineering group Ultra Electronics, however, may be a refreshing contrast.

On Friday, Defence Secretary George Robertson said he was predisposed to buy the Future Large Aircraft (FLA) in a pounds 2bn deal. British Aerospace was seen as the main beneficiary; Ultra's shares, at 285p, were unmoved by the news. But the company could well benefit from a significant contract of this nature.

Even if there is nothing in FLA for the group, it has a strong order book and is building up a commercial aerospace business to boot. Stockbroker Charterhouse Tilney sees 12-15 per cent growth in earnings and dividends over the next two years. When it was floated at 250p in September 1996 the shares took off, only to come nearly all the way back down before picking up again since May. Charterhouse argues that even at 325p the shares could be undervalued.

Next week sees a clutch of results from major companies: in all, 17 members of the FT-SE 100 report figures, or 27 per cent of the index by value. They kick off with British Airways, HSBC Holdings and Pearson on Monday. Be sure that if these companies disappoint, and especially if there is a whiff of higher bad debts from the financial groups, there could well be further weakness in the market.

There is a growing belief that brewers are beginning to look cheap again. The sector has been an underperformer since the start of the year, but with the Carlsberg Tetley problem out of the way, spending on the up, and the Budget having a positive impact, things are looking bright. Both Bass and Whitbread should do well, while regional brewers Vaux, Morland and Greene King are well positioned in their local markets.

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