RAB

Steel magnate Lakshmi Mittal raised his family’s stake in the hedge fund manager to about 10% and invested $200 million in the Special Situations fund.

RAB founders, Philip Richards and Michael Alen-Buckley, each retain a 21% stake.

Funds under management have risen to about $7 billion. This and performance fees have led to average EPS growth of over 100% in the past five years.

RAB’s two biggest funds, Special Situations and Energy focus on resources, which continued to thrive.

Andrew Gibson from Galvan Research & Trading says: ‘RAB delivered another set of excellent figures in late July with profits up 57% at the half-way stage.

‘Despite the impressive track record, the shares trade on a multiple of just over ten times earnings, which represents a substantial discount to lower-growth money managers, such as Schroders (SDR), Invesco (IVZ) and Aberdeen Asset Management (ADN), which all trade at just over 15 times historical earnings.

‘RAB’s shares have dropped around 20% in a fortnight due to general concerns about the hedge fund industry, and this indiscriminate selling has presented a trading buy in RAB.’

Action: BUY RAB Capital • Target 120p • Stop loss 90p

TIME TARGET: 4 WEEKS