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Authoritative Independent Monthly Share Selections Using Technical & Fundamental Analysis

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Xchanging - New outsourcing firm in the Capita mould

May 2007

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

The trend to outsource non-essential activities in order to generate cost savings has thrown up some big stock market winners, such as Capita, 693p and Serco, 482p, whose shares have gained nine-fold and four-fold respectively in the past ten years. Another company that appears to be out of the same mould is Xchanging, which is coming to the main market later this month amidst a blaze of publicity. The float, which is being handled by Citigroup and UBS, is expected to raise gross proceeds of £193m (£75m of this is new money with the remainder being part sales by private equity backer General Electric as well as management, who are expected to retain at least 20%). At the middle of the 210p-240p pricing range, Xchanging would ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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