LESS than a week after buying 300,000 shares in the market, Mr Dermot Desmond's investment company IIU has bought a further 500,000 Unidare shares to take its stake in the engineering company to 12.6 per cent.

The price paid by IIU has not been disclosed but since its most recent profits warning, Unidare shares have been trading at 175p and closed at that level yesterday.

This continued investment by IIU in Unidare at a likely cost of almost £900,000 will only increase speculation in the market about IIU's intentions. By continually buying Unidare shares in the market, IIU is going against the investment trend, with most institutional investors selling shares for the best part of the year.

In the past year, Unidare has issued two profits warnings and seen its share price fall from 300p to the current 175p. IIU has built up its 12.6 per cent stake in various stages, but most of the 2.5 million shares now held were bought at prices well in excess of the current level.

These paper losses have not, apparently, dissuaded IIU from continuing to increase is shareholding to a level where it is the second largest institutional shareholder in the company.

Since Mr Desmond established IIU after he sold his majority stake in NCB Stockbrokers to Ulster Bank, the investment company has concentrated its Irish equity investments on what are viewed as poorly performing public companies.

Apart from the 12.6 per cent stake, IIU has disclosable shareholdings in Golden Vale (6.5 per cent), Barlo (3.5 per cent) and Jones Group (3.3 per cent).

IIU also holds a stake in Esat Digifone, the Irish Norwegian company which won the second mobile phone licence.