MARKET REPORT: Vodafone lifted as Swedish activist Cevian takes stake

Vodafone was on the rise as it became the latest blue-chip firm to be targeted by an activist investor.

The FTSE 100 telecom group’s shares climbed 1.9 per cent, or 2.4p, to 130.02p after it emerged that Cevian Capital, one of the largest activists in Europe, has built up an undisclosed stake.

It is thought the Stockholm-based fund, which has also been pursuing campaigns against insurer Aviva (up 0.2 per cent, or 0.7p, at 434.2p) and education group Pearson (up 1.5 per cent, or 9p, at 615.2p), will pressure the company to sell parts of its global empire as well as improve its core businesses.

Cevian’s efforts also received the backing yesterday of Abrdn (down 0.5 per cent, or 1.1p, to 240.9p), one of Vodafone’s top-10 shareholders.

Abrdn’s head of UK equities Andrew Millington said the activist campaign was ‘very sensible’, the FT reported.

‘Looking at the classic list of activist strategies, Vodafone is the sort of name which might pop up on a hit list – terrible share price performance, unwieldy group structure and potential for strong cash generation,’ said AJ Bell investment director Russ Mould.

However, he warned that Vodafone’s ‘monster’ £37billion debt pile could ‘limit the scope’ for increased share buy backs or higher dividends, and therefore Cevian may push for ‘a further refinement of the portfolio through mergers or sales’.

Stock Watch –  Studio Retail Group

Studio Retail Group plunged to its lowest level in nearly a decade after issuing a profit warning yesterday.

The online seller of clothing, homeware, toys and gifts flagged ‘subdued’ demand for its products in early January, adding that supply chain disruption had increased its costs and led to late-arriving stock sitting unsold in its warehouses.

The firm forecast a full-year profit of between £28million and £30million, below market expectations of £35million.

Shares crashed 35.2 per cent, or 56p, to 103p.

Cevian’s arrival means Vodafone joins the list of FTSE 100 firms being targeted by activists, which includes pharma firm Glaxosmithkline (down 1.1 per cent, or 18p, at 1643p), consumer goods giant Unilever (up 0.03 per cent, or 1p, at 3787.5p) and utility SSE (up 0.3 per cent, or 4p, at 1582.5p). 

Asos co-founder and former chief executive Nick Robertson sold almost £10million of the AIM giant’s stock over the last few days, stock market filings showed. Robertson, 54, sold 450,000 shares at between 2204p and 2257p a pop.

His sales – which are understood to be linked to taxes – came on the same day that HSBC analysts cut their rating on its stock from ‘buy’ to ‘hold’ and slashed its target price to 2,410p from 4,200p. Shares fell 0.6 per cent, or 13p, to 2213p.

The FTSE 100 dipped 0.02 per cent, or 1.7 points, at 7464.37 while the FTSE 250 gained 1.3 per cent, or 283.32 points, to 21926.62.

London’s blue-chips ended the final session of January with a whimper after a volatile start to the year as investors warily eyed the risks posed by inflation, interest rate rises and tensions on the Ukrainian border.

The latter continued to support strong oil prices, with Brent rising more than 17 per cent in January to over $90 a barrel amid fears war in Eastern Europe will disrupt Russian energy supplies. 

Victoria Scholar, head of investment at Interactive Investor, predicted Brent prices will remain ‘well supported’ in the near-term amid ‘robust global demand’ and a ‘drip feed’ of supply from the Opec+ cartel.

However, the increase in oil prices failed to lift BP, which dipped 0.7 per cent, or 2.65p to 382.8p.

Shell, meanwhile, began its first day of dealings after merging its two classes of stock into one following its relocation to the UK from the Netherlands. 

It closed at 1886.6p, down around 1.5 per cent on its opening price of 1916p.

Scottish Mortgage Investment Trust, which counts US tech giants such as Tesla in its portfolio, added 5 per cent, or 51p, to 1079p as investors returned to technology stocks following a selloff earlier this month.

However, more defensive stocks which received interest during the market rout last month went into reverse, with mining giant Anglo American down 2.8 per cent, or 93.5p, at 3228p while tobacco group Imperial Brands slipped 0.9 per cent, or 15p, to 1751.5p.