The headlines this weekend screamed “Stock market completes its most miserable quarter in nine years”. Indeed the FTSE100 fell 13.74% in the period 30th June – 30th Sept. NASDAQ fell by 12.9%.
But the UK FTSE SCS Index was ‘only’ down 7.6% in Q3. Indeed 2011 YTD, the UK FTSE SCS Index is down a minor 1% compared to 13% for the FTSE100. Much of this is due to its largest constituent – Autonomy and that ‘infamous’ HP takeover. See HP and Autonomy. The UK FTSE Hardware Index is actually up 11% YTD – mainly on the coattails of ARM. Indeed UK Tech has been a pretty good place to be ‘relatively speaking’ this year. The reasons are NOT because UK tech has been ‘on a roll’ in any general sense – any subscriber to our latest MarketViews report will know that! See Two more years of market misery. It has mainly been due to 1) Considerable takeover activity and 2) ‘Diversity of Performance’ where, for example, anything connected with Apple or ‘new media’ has benefited.
The month of September continued a similar trend with the FTSE100 down 4.9% but FTSE SCS down just 1.8% and FTSE hardware up 3.3%.
Indeed, the reasons for out-performance were illustrated yet again in Sept. The best performing share in our UK SCS firmament was Clarity – See An ‘Enigmatic’ offer for Clarity. This had nothing to do with ‘good performance’ – quite the opposite! It was all to do with Jon Moulton’s Better Capital riding to the rescue. Maxima was up 24% in the month after taking the ‘For Sale’ boards down but adds Ian Smith to the board. So expect ‘corporate activity’. Blinkx was up another 28.5% this month (that makes a 76% gain YTD). Not only is Blinkx video search and associated services in a particularly ‘hot spot’ right now (See Blinkx roller-coaster) but there is growing expectation of bid interest. Allocate was up 19% strangely because of very good full year results! See Allocate’s health rating rise.
At the other end of the scale, similar factors were in play. Misys fell 23% largely because FIS walked away from its bid which Misys said had grossly undervalued the company. Indeed Q1 results declared on 28th Sept indicated Across the board growth for Misys. Mouchel also slumped another 29%. See Mouchel in midst of debt reduction programme. At 34p, that’s even further from the 153p offer from Costain that Mouchel rejected as recently as Mar 11.
RM were down 14% on the month. See RM clears out the old furniture and rearranges the rest. The immediate knee jerk reaction to newly appointed Chairman Martyn Ratcliffe’s strategic plan was much worse than this but the shares staged quite a recovery when the outlook was reassessed. Ratcliffe has an impressive record as Microgen attests. (Microgen shares are up 40% 2011 YTD. See Microgen experiences growth and resilience) The Ratcliffe medicine might be unpalatable but, in the case of RM, necessary.
Of course, the Most Troubled Company of the Month Award just must go to HP – down another 14% this month making a c50% dive YTD. In case you have been in a monastery this month, see They came to bury Leo, not to praise him. Bluntly “you couldn’t make it up…”