Market Report: Sherborne ups the ante on 3i Group

The City's best-known activist investor is keeping Simon Borrows' 3i Group guessing as it upped its stake again yesterday in the private-equity group.

It has been a cat and mouse game since Ed Bramson's Sherborne Investors first turned up on the share register at 3i in January. The latest stake building left analysts to liken the moves to "a game of poker where the ante continues to be upped".

Earlier this week Mr Burrows spent another wedge of cash taking his holdings in the group that owns retailers including Agent Provocateur and Hobbs to 0.84 per cent. Yesterday Sherborne went one better and now control 4.2 per cent of the group.

The shares fell 3.9p to 316.5p on the news.

Sherborne quietly built up its 3 per cent stake though the listed Sherborne 2 investment vehicle which came to light in January. Sherborne is well known for taking stakes in under-performing companies and shaking up management. At fund manager F&C Asset Management it led a boardroom coup.

Under Mr Borrows, 3i has begun a turnaround and its shares have soared more than 80 per cent since June 2012 following Mr Borrows' appointment in May last year.

Investec's Jamie Lowe said: "It is difficult to see what Sherborne can do in terms of unlocking value for shareholders that Mr Borrows has not already done."

Over on the benchmark index, financial-services group Old Mutual, which owns Skandia, was top of the tree after reporting an 18 per cent rise in annual profits in 2012, driven by a strong performance in Africa. The shares sailed up 8.9p to 211.4p.

Brent Cross and Bullring owner Hammerson built up a 12.1p gain to 506.5p after reporting solid results and a net asset value up 2.3 per cent to £5.42 a share.

Another riser was outsourcer Capita. It has bought debt-collection agency iQor and its shares rose 35p rise to 858.5p.

Safety inspector Intertek looks like it also might get a boost from the horse-meat scandal.

Intertek tests everything from electrical goods and aerospace parts to toys and T-shirts. They also do food – important at a time when a wave of new checks for the industry are emerging to uncover any equine traces.

Analysts at WH Ireland think its full-year results on Monday will be strong and the shares added 41p to 3,380p.

The benchmark index ended the morning session down as weak manufacturing data led investors to become cautious, but once the US stock market opened the FTSE 100 index lifted and finished up 17.79 points to 6,378.6.

But mediocre Chinese and European manufacturing data hit mining stocks. The biggest loser on the benchmark index, for the second day, was copper miner Kazakhmys. On Thursday it revealed a poor trading update and a write down of its stake in rival miner ENRC. Yesterday Société Générale downgraded the Kazakhstan-focused miner to a sell and the shares dug their way to the bottom of the index, down 29p to 590p.

On Thursday, chairman Vladimir Kim handed the reins to former-London Metal Exchange boss Simon Heale. But Mr Kimstill owns a 28 per cent stake in the group.

Analysts at JPMorgan Cazenove also took their red pen to Evraz, the Russian steel maker which is part-owned by Roman Abramovich. They rate it underweight and reduced their price target to 252p. The shares slipped 11.4p to 261.5p.

After the Royal Bank of Scotland's results on Thursday, it was Lloyds Banking Group yesterday. The £570m full-year net loss did not cheer the market and the shares banked a 1.22p decline to 53.25p.

Small-cap investment group Candover Investments revealed that net asset value per share fell to 608p for the year to the end of December. Shares also dropped on the news – off 35.62p to 390p.

Over on AIM, North Sea-focused oil group Ithaca Energy paid £203m for Valiant Petroleum. The deal will help Ithaca double its production forecast for the year. But a weak update from Valiant was followed by Ithaca's shares slipping 12.5p to 115.75p.

Archipelago Resources reported good drilling results in Mali and its shares were 3.5p better off at 55p.

But uranium explorer Forte Energy has failed to agree a deal and its shares dipped 0.42p to 1.35p.

Buy

Sports Direct International

Snap up shares in Sports Direct International, Oriel Securities insists. Oriel's analysts think the company's purchase of fashion chain Republic on Thursday increases the "focus on premium lifestyle" which bolsters the other chains it has bought, including Cruise and a stake in Flannels. Oriel rates the sports-to-fashion retailer a buy with a 510p price target for shares that are 418p.

Sell

Rightmove

Flog shares in homes website Rightmove, Peel Hunt advises. Peel Hunt's Malcolm Morgan thinks the websites' flat advertising numbers and a small reduction in market share is of "less importance to investors than the pricing power" He thinks it remains "fundamentally overvalued" and gives the shares, which are currently 1,761p, a target price 1,180p.

Hold

Laird

Hang on to shares in high-tech electronics company Laird, Investec suggests. Its results revealed that lower sales were offset with higher margins. But analysts at Investec say they struggle to see how "revenues will grow faster than the sector". They have put their share price target under review. The shares are currently 248.5p.