Shares digital

3i Group (III) 806.50p

The shares in the buyout fund have tanked this year, along with the wider financial sector. However, ahead of a pre-close update scheduled for the end of this month (27 March), many see value in the shares and the 15% fall over the past three weeks seems overdone, offering a good entry point. Number crunchers at investment bank UBS say the shares trade at a 20% discount to their estimate of £10.25 net asset value, and highlight the company’s defensive quality and diversified business, with some large writedowns unduly priced in the shares. Dresdner Kleinwort adds: ‘With the current price implying either a marked fall in the net asset value, or sub-cost of equity returns into perpetuity, we feel that too gloomy an outcome is being discounted at present.’ 3i’s geographical reach and balanced business justify a re-rating of the shares when the current bout of fear for the wider financial sector settles down. We go long ahead of the pre-close update, placing a stop loss at 758p to protect ourselves from volatility.

ACTION: BUY 3i • Target 887p • Stop Loss 758p

TIME TARGET: 5 WEEKS