The most depressing thing about the Quindell saga

Thursday, Aug 21 2014 by
15

… if you haven’t been keeping up with Quindell, some might say you’re missing out – it sort of depends how you get your kicks in life.  It is rare you get to see such a public back and forth between the long and the short side of a stock; usually those bearish stay out and stay quiet, but in Quindell’s case you have a fistful of public legal spats, accusations of impropriety and the usual festival of characters wading in on either side of the debate.

I have nothing to add on the equity side; it’s either cheap and legit or it’s expensive and isn’t, and I look at situations like this with a shrug of my shoulders. Maybe I’m missing some value by permanently sitting on the sidelines, but the level of due diligence it’d take for me to get comfortable with a stock blasted with a reasonably convincing 74-page short manifesto just doesn’t appeal. It’s the same deal as I’ve said before with mining and exploration stocks – I find myself agreeing with most points I read. I lack the capacity to critically analyse the arguments, and I lack the desire to figure it all out. As far as I’m concerned, the returns to my time are much better looking for solid companies with good returns on capital at reasonable valuations – not looking for diamonds among the rubble and hoping for multi-baggers. Fortunately, it turns out more ‘boring’ companies might be a more reliable way of doing that.

Still, I had the misfortune at lunchtime of noticing £QPP had released a set of results today, and trotting over to everyone’s favourite stock message board to see what the word on the street was, since it was much of the same from the company but the price retreated 10%. Reading back was like witnessing a microcosm of a long-term stock cycle in action:

The joy pre-trading:

1

The confusion when it begins (I never understood this one..):

2

The embattled mentality:

3

The gloating:

4

It is just so far removed from how investors should be thinking about pieces of part-ownership in businesses. It’s breaking all the golden rules of investing – or any chance-based game, for that matter (I come from…

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Watchstone Group plc offers technology solutions to the insurance, automotive and healthcare industries. Its segments include Hubio, Healthcare (pt Health and InnoCare), and ingenie. Hubio provides integrated solutions to help organizations in the insurance and automotive sectors to build customer engagement and enable usage-based personalization. Healthcare includes ptHealth, a national healthcare company that owns and operates physical rehabilitation clinics across Canada, and InnoCare, a clinic management software platform and call center and customer service operation based in Canada. Its ingenie is an insurance broker. Using telematics technology, ingenie gives its community feedback, advice and discounts to help young drivers improve their driving skills. more »

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11 Comments on this Article show/hide all

snickers 22nd Aug '14 1 of 11
1

Once, or maybe twice, I've looked at the twitter accounts of qpp fans: usually they have a footballer as a background photo (I mean Association football) suggesting that it's the long and chaotic ride that is the essential quality they seek. I'd quite like to know how much money the fans have put in, to go with the fever: with football it's possible to feel the pain even without a season ticket, though I don't see how qpp-fever could exist without money as fuel. & unlike football, relegation, when it happens in business, is permenant.

I think it ought to be possible to get pleasure from 'solid companies with good returns': at least the companies which do useful & clever things and make the world turn round.

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Ramridge 22nd Aug '14 2 of 11
2

I have been following the QPP saga from the safety of the pavement looking at an unfolding car crash.
For a surgical exposition of the smoke and mirrors accounts published yesterday, you couldn't do better than read Alphaville's article here
http://ftalphaville.ft.com/2014/08/21/1940561/quindell-promises-and-a-cash-flow-conundrum/
The stock remains one for the gamblers.
Regards, Ram

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Heisenberg 22nd Aug '14 3 of 11
4

"If your faith in the value of the business is built on such shaky ground that a 10% drop in the share price winds you up or worries you enough to seek any possible justification for the fall – and not recheck your thesis and your figures and consider buying more, if warranted – one might think that you don’t have much business being in the stock at all."

These are wise words for every investor to remember.

The investment landscape is constantly changing - at times share price moves will reflect changing fundamentals, much of the time it may be noise - the key is to figure out when you need to act (exit) and when you need to sit tight / be patient (or potentially increase a position if the original thesis remains intact).

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Mechanical Bull 22nd Aug '14 4 of 11
3

Great post and I agree with everything apart from the conclusion that this is depressing. If all investors were rational then there would be fewer opportunities to exploit. Its not that I rejoice when I see other people's emotions run away with them. What it does do is to remind myself not to behave like them.

Blog: Mechanical Bull Blog
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Paul Scott 23rd Aug '14 5 of 11
1

I've consistently warned people about debtors and cashflow with this company, for more than 18 mths.

So as the wheels come off, my readers are safe. Very pleasing.

Globo wiill be the next one to unravel - you have been warned.

Regards, Paul.

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intuitive6191 23rd Aug '14 6 of 11
1

"Much of the time it may be noise - the key is to figure out when you need to act (exit) and when you need to sit tight"
I would agree. The major problem for private investors is that a drop may look irrational but it is in fact based upon inside information.

Not suggesting this is happening at QPP.

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tochered 27th Aug '14 7 of 11
1

Its too risky for me, anyone thinking of buying should read the sheriff's report here www.shareprophets.advfn.com

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johnrosier 30th Aug '14 8 of 11
5

I think the most depressing thing about the Quindell saga is how much time and energy is spent agonising over this stock by both supporters and detractors. I held this in the JIC Portfolio from January 2012 when I bought at 108p before adding at 78p in July 2012. At that time no one was talking about it and it seemed a pretty good risk reward. I sold out between January and May 2013 at prices between 230p and 163p. Suddenly it was all over the bulletin boards with everyone seemingly having a view on it. There were also doubts about the business model and cash flow which in the long term may prove either correct or wrong. The point is, there are plenty of other fish in the sea and in my view energy spent arguing the case either for or against Quindell would be better spent finding new ideas that are not on everyone's radar screen.

Website: JohnsInvestmentChronicle
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TheWatchmaker 1st Sep '14 9 of 11
1

A very good point John

"I think the most depressing thing about the Quindell saga is how much time and energy is spent agonising over this stock by both supporters and detractors."

It's a bit like there's been a road accident and lots of us are rubber-necking to see what the damage is.

Maybe we should just concentrate on where we are going.

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DLG12 1st Sep '14 10 of 11

Like John I have been a holder but sold some time ago and now watch with interest. I note that Gervais Williams is sticking with the business within his portfolio. Clearly an experienced and successful fund manager. Intriguing?

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marben100 1st Sep '14 11 of 11

In reply to post #85765

He was also a substantial shareholder of Silverdell, when it collapsed. ;0)

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ExpectingValue

Private investor turned hedge fund analyst, looking predominantly at global small caps. Sector agnostic.

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