Two words were conspicious by their absence from this morning’s profit warning from RAB Capital: Northern Rock.

The £7 billion hedge fund manager went out of its way to play down a link between November’s 36 per cent slide in the shares of the stricken mortgage lender — where RAB is the second-biggest investor — and its trading update. The worst hits were in its energy fund — which is heavily invested in AIM nautural resources stocks — and special situations fund, in which its Rock stake sits. However, while RAB concedes that position has so far proved unprofitable, it states that it accounts for only between 2 per cent and 3 per cent of the fund, and less than 1 per cent of total assets under management.

In falling just 5 per cent to 77p — still more than three times their 25p issue price of three years ago — RAB’s shares took that alert in their stride. The retreat is modest given the 32 per cent and 18 per cent cuts to 2007 and 2008 earnings forecasts made in its wake.

The shares are underpinned by RAB’s considerable cash pile — equivalent to 26p a share — and their relative illiquidity: the stakes of the two founders, and Lakshmi Mittal, the Indian steel billionaire, account for more than half the equity.

But RAB is also relatively cheap: once the cash is stripped out, the shares trade at less than 10 times next year’s forecasts.

Shareholders should take comfort from the fact that RAB’s funds are still up 8 per cent in the year to date — which is important given the contribution of performance fees to profits.

But given the continued fragility of financial markets, and the unresolved fate of the Rock, there is no reason to chase the shares for now.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive