The bet that’s cost fund boss £20m
RAJEEV Bhaman, head of global equities at US investment house Oppenheimer, last month topped up his funds’ shareholding in financial payment firm Earthport to 78.3m shares from 73.5m, a 16pc-plus stake worth £28.5m at a then share price of 30p.
It’s now worth £8.53m after the stock plummeted 7p or 28pc to 17.88p, after touching 17p, following a shock profits warning.
Bhaman and other major shareholders including International Finance (6.99pc), Schroders Investment Management (6.2pc) and chief executive Hank Uberoi (5.66pc) took a big one on the chin after the board warned of a potential financial loss of £5m at foreign exchange subsidiary, Baydonhill.
The hefty loss materialised after Baydonhill, acquired for £6.4m cash in September 2013, made payments on behalf of a corporate client which subsequently filed for administration. Investigations indicated the customer may have ‘intentionally engaged in fraudulent activity’.
There are no assurances that it will be able to recover lost funds. Not great news for a company which is already expected by analysts to incur losses of around £6m in 2016.
The year had started so well too with Oppenheimer’s stakebuilding accompanying the appointments of N+1 Singer and Shore Capital as joint brokers to work alongside Nomad Panmure Gordon.
Earthport last week beefed up its board with the appointment of John B McCoy, the former chairman and chief executive of Bank One Corporation. McCoy joined and also bought 550,000 shares, or 0.12pc of the equity. Not a great introduction to AIM.
Over on the main market there was excellent news from a UK bank for a change. Lloyds Banking Group, rescued through a £20.5bn government bail-out during the 2008 financial crisis, leaving taxpayers with a 39pc stake which has since been reduced to 9.88pc, powered 8.44p or 13.6pc ahead to 70.64p following a dividend bonus.
Shareholders were awarded a final dividend of 1.5p, taking the total for the year to 2.25p, and a special payment of 0.5p. Number crunchers were particularly impressed with the 15pc underlying return on equity which is better than any other bank.
Insurance giant RSA was not far behind with a gain of 38.7p or 9.8pc to 433.2p following better-than- expected full-year results. Their performance spurred on others in the financial services sector with tax-payer owned Royal Bank of Scotland 11.9p higher at 244p and Barclays, ahead of Tuesday’s results, 8.1p better at 164.85p.
It certainly revitalised the Footsie which sprinted 145.63 points forward to 6012.81, while the FTSE 250 jumped 281.57 points to 16,399.07. Wall Street was a lot more subdued but 30 points up before lunch helped by an upturn in US manufacturing activity.
Harry Stein, press officer at the LSE, kindly offered an interesting fact that this month consumer goods has become the largest sector in the Footsie, overtaking financial services which had reigned supreme since 2006. Large constituent consumer goods companies include Dunhill tobacco giant Bats, 43.5p up at 3877.5p which announced its 17th successive dividend increase.
After Panmure Gordon reiterated its sell recommendation in the wake of in line profits, Capita slumped 55p to a two-year low of 1017p. The outsourcing group disappointed by posting a lower estimate of new work it was bidding for in the coming year.
Kazakhstan miner Kaz Minerals rose 4p to 149p. Buyers dug in on hearing the company expects its copper output to increase by at least 60pc this year.
Microbial technology group Byotrol leapt 0.38p or 10pc to 4.12p following an upbeat trading update.
Chairman Nicholas Martel said that the regulatory approval process with the Envi- ronmental Protection Agency in the US is on track, with the toughest microbiological test already completed satisfactorily.
CityFibre, a designer, builder, owner and operator of fibre optic infrastructure in UK towns and cities, edged up a penny to 52p. It followed publication of Ofcom’s recommendations in the strategic review of digital communications which emphasised the need for a strategic shift to support large-scale investment in end-to-end fibre.
Contract news lifted James Fisher 8.5p to 958.5p. The company has been awarded a marine services and support contract by Galloper Wind Farm Limited, worth in excess of £25m. Investec’s target price is 1250p.
Persistent scrappy selling dragged Premier Oil 2.25p lower to 39p after it reported a wider pre-tax loss for 2015 of £596m, hurt by lower oil prices. It compares with a £260m loss a year earlier. A strong trading update helped Crimson Tide jump 16pc to 3.25p. Results for the year to end-December 2015 will be ahead of expectations. ÷ INDUSTRIAL thread and consumer textile group Coats rose 3p to 25.25p after betterthan-expected full-year results, due to a strong performance in apparel and footwear. Pre-exceptional operating profits are up 19pc and adjusted earnings per share 38pc higher. It has a healthy cash balance of £342m to support its three UK pension schemes and has initiated settlement discussions with each scheme’s trustees.