And before I get too excited the purchase of circa 7,000 shares at 210 p will reduce my average in price to 240.
Am sufficiently convinced that we are getting very close to the point where a few more mid-cap fund managers follow Gervais Williams and decide that Q is "investible" after all that I have put in another order for £15 k today. A few institutions buying will drive that price.
You have probably seen that Gervais Williams of Miton (ex head of small and mid cap at Gartmore, and perhaps one of the best small cap fund managers in the UK) has been widely quoted in the last couple of days confirming that he remains an investor in Quindell. Williams is no mug- far from it. He recognises that market sentiment is against the company, but reconfirms his view that the fundamentals remain sound. He has made exceptional returns in buying "out of love" stocks.
There is little point in fretting over every second's share price move: the make up of the share register, the amount of stock on loan, the number of day-traders all makes for a volatile price which will move intra day and inter day. The one thing you can say on a medium term view is that the price is wrong. If the shorters/ critics view is shown to be right the price has a long way to fall- at the worst case to zero. If the company/ fans view is right (and by this I mean very strong cash generation in Q4 and no need for a capital raise in the interim) the price should be a long way north of here- at least £10. Even being generous to the critics if you apply a 50% chane to them being right the risk-weighted price is £5. You can put your own prices in and apply your own risk weightings- but the point remains- this is not a stock for widows and orphans but one that has a high degree of risk. Even so the benefits, to my mind, greatly outweigh the risks- the stock is wrongly priced. I am buying more, and will do so every time the stock lurches down. By the way, the critics are entitled to their view- launching silly abusive campaigns against journalists who don't agree with your point of view always reflects badly.
It is hard to fault this morning's announcement. First- it is made first thing on a Monday- a week ahead of expectations- and a sign of confidence (bad news is slipped out at COB on a Friday). Secondly the numbers are in line with expectations. Thirdly the reassertion of guidance for the second half of the year. And lastly the appointment of David Currie- what in the City would be described as "a safe pair of hands" - Currie is a class act, and he wouldn't be doing this if he hadn't done his own due diligence. As short positions unwind, and institutions digest this mornings' news, there is a real chance the price will move sharply ahead. Don't be fixated about the shorters- the key drive to the share price will be serious buying interest, and the announcement today can only help that- it looks like the management are finally listening to/ getting good advice on how to communicate with the market.
David Currie, the ex-head of Investec Corporate Finance, is known as a very sensible, measured individual. He will not have accepted this positon if he thought there were any major reputational issues to face. His appointment will reassure a number of instituional investors. I have bought a further paltry 2411 shares this morning.
Why Short Now? The share price is clearly wrong. If the company does manage to produce 5p of clean earnings then a 14p share price is daft. Equally if the auditors take a tougher line, new management take a different view of accounting policies, then the earnings number could be very different- and a lot lower. That is what makes a market. Those who believe in the management should fill their boots.
Re audited numbers. In every set of accounts there is an element of discretion in, inter alia, accounting policies for revenue recognition, bad debts, amortisation. After a change in executive management (and you can expect the instiutional investors to be pushing for this) new management may review the old policies and apply new (more conservative) ones. This has the benefit of improving the "quality" of the reported numbers- but may lead to a short-term horror show.
When I posted after the announcement of the 9th that there may be a problem with the listing process I was told that "I was talking utter tosh". I hold some shares, so I get no pleasure from this- but the announcement today is also deficient. If Quindell has fallen foul of the material change rule this would have been flagged in the first set of comments from the FCA on the Listing Particulars. If the process had "been on track" on Monday then Quindell would have known there was a possible problem- in which case questions will be asked as to why the announcement on Monday was made (I did flag that I thought the announcement was a negative, and got shouted down). This whole process has been appallingly badly handled by the company and the advisers. The company has shown itself to be, from an institutional viewpoint, uninvestible. While the stock remains on AIM the primary regulatory responsibility rests with the NOMAD- on the Main Market it rests with the FCA- looks like the FCA didn't want that risk.
The "Premium Listing" and the "FTSE 250" are two, entirely different things. The Listing on the main market is the first thing to be acheived- and that can happen at any time. The admission to the FSE 250 (or any other FTSE index) happens at regular review dates.