Broker snap: Singer not fazed by Dunelm founder's stake sale

7th Oct 2009 13:05

Bill Adderley, the founder and life president of Dunelm has reduced his holding in the company by 7.8% but Singer Capital Markets argues that the secondary placing of Adderley's shares will improve liquidity in the home furnishing company's shares.'Prior to this announcement, the free float of Dunelm was c. 32.7%, and will subsequently increase to c. 40.5%,' Singer notes. Adderley has pledged not to sell any more Dunelm shares in the next 12 months while chief executive officer Will Adderley, who has a 25% stake in the company, has informed the board that he has no intention of selling any of his 50m shares in Dunelm.Adderley senior's shares were placed at a price of 310p per share. Bill Adderley's stake in the company when aggregated with that of his wide has been reduced to 34% as a result of the share placing.Singer remains a fan of the shares and has a price target of 360p for the stock. 'We initiated coverage on Dunelm last week and in our note we ran sensitivities that show the 3 year CAGR [compound annual growth rate] could double compared to current base forecasts, from 11% to 22%, driven by organic developments and faster expansion,' the broker said. 'We do not believe this prospect is factored into the valuation,' Singer added.