THE INVESTMENT COLUMN: Stop-loss pushes Harvey Nash out of our

HARSH. THE Independent's portfolio of share tips for 2005 has to let go of Harvey Nash, the IT recruitment specialist. We introduced a "stop-loss" strategy in an effort to make this annual ritual a bit more like the way our readers ought to be investing. Yesterday, Harvey Nash fell more than 20 per cent below its peak for the year. We tipped the shares at 90.5p. Now they are 75p, a loss of 17.1 per cent.

It is particularly upsetting because the steep fall has not come as a result of bad news from the company. Indeed, there has been so little trading of the shares that we can't even detect an expectation of bad news to come.

Last year was a strong one for the IT recruitment industry, as businesses in the UK and US regained their confidence, dusted off big computer projects and demanded IT consultants and permanent staff to implement them. We last heard from Harvey Nash in February, when it said full-year revenues were up 25 per cent and profits in line with forecasts. Rivals have said that the UK industry at least is still growing at a decent clip.

So what might be going wrong? Harvey Nash does not have the strongest balance sheet in the industry, and cash constraints might mean it cannot compete agressively for new business. It might have failed to return its Continental European operations to growth because of high unemployment there. Results are out on 25 April, when we will find out. For the company's place in our portfolio, however, it is too late.

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