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Prodesse (PRD) 442.3p

The investment company’s borrowing costs are directly linked to US interest rates so the magnitude and swiftness of last week’s unscheduled 75-basis point rate cut by the Federal Reserve will almost certainly prompt earnings upgrades. At 442p, shares are up 14% on our original 388p tip (29 Nov ‘07) and 11% ahead of their price before last Tuesday’s (22 January) Fed decision to cut rates to 3.5%. By the time you read this rates will probably have gone down again following this week’s scheduled Federal Open Market Committee (FOMC) meeting when rate decisions are usually made. If, as some were predicting as we went to press, rates go to 3%, that is a 33% saving on Prodesse’s funding costs since September when rates were 5.25%. SK