Good morning!
I had a second wind last night, and added sections on the trading updates from Latchways (LTC) and Filtronic (FTC) into yesterday's report, so here is the link if you wish to see that.
A quick recap on a couple of stocks I didn't like yesterday. One has plummeted, and one has gone through the roof, as follows;
Quindell (LON:QPP)
This share has come back from suspension today, following the barrage of negative newsflow yesterday, culminating in the announcement at 14:51 yesterday afternoon that the Serious Fraud Office is investigating "past business and accounting practices at the company". That's not exactly ideal news to come less than a couple of market trading hours before the shares returned from suspension this morning.
At the time of writing, QPP shares seem to have settled around 89p, with nearly 11m shares traded (I'm writing this at 09:18), which is a discount to the mooted 100p cash return to shareholders. That seems a reasonable price to me, given all the uncertainty. Will the cash return be approved by the Court, given the seriousness of regulatory investigations, and potential claims against the company? Who knows? Ask a lawyer!
Furthermore, sentiment will play a big part here. Who would want to hold a share where serious accounting irregularities & misstatements have not just been alleged, but have been admitted now? I can only think of two types of shareholder - firstly, the irrational PI fanatics who will blindly support the company whatever it does, and secondly, special situation investors, who have worked out the various scenarios and taken a punt based on what they believe to be the most likely risk-weighted outcome.
So the main issue is if, and when the cash return to shareholders might take place, and how much it is likely to be. My guess is that the amount of shareholder return might be scaled back from 100p to a lower figure, so that new management have plenty of cash headroom to deal with whatever else comes out of the woodwork, not to mention the likely considerable ongoing legal & accounting costs.
Tern (LON:TERN)
This micro cap's shares were 13.7p when I pointed out that its main investment was a dormant company when its last accounts were filed in Sep 2014. They are now 22.5p, up 64% in less than 24 hours!
So…
