Provident Financial is swamped by short sellers
BRITAIN’S largest home- credit lender had the door slammed in its face yesterday following reports it has become the latest target of aggressive short selling by hedge funds.
Provident Financial saw more than £158.6m wiped off its value after it was reported hedge funds AQR, Sytematica and Lansdowne Partners have made large bets on its share price collapsing.
In June, the firm crashed by 16pc in just one day when it issued a major profit warning. A botched restructuring drive left it desperately short-staffed and unable to collect cash from many creditors.
The firm declined to comment on the increasing vote of no-confidence from hedge funds, but Portia Patel, an analyst at Liberum, said many probably think more profit warnings are on their way.
‘Provident have indicated that they are sticking to their previous profit guidance on home credit, but there was nothing new in their messaging to suggest they were doing anything beyond previously flagged measures to rectify the problems,’ she said.
‘What’s more, the FTSE reweights are coming up and, as the smallest firm currently in the FTSE 100, some may see Provident as a likely candidate for deletion.’
Shares fell 5.8pc, or 107p, to 1745p, a three-year low.
The FTSE 100 fell 0.1pc, or 5.1, to 7318.9 as concerns over the tumultuous relationship between North Korea and the United States continued to discourage risk taking among investors.
After three months of hitting the skids, a ‘buy’ rating from broker N+1 Singer inflated shares in bike seller Halfords. Analysts said the firm should put out a solid update in two weeks as it benefits from more and more people taking ‘staycation’ holidays in the UK.
Furthermore, it said the firm has a good record for recruiting chief executive talent – even if its struggles to keep hold of them.
As a result, it has faith that Halfords’ replacement for boss Jill McDonald, who defects to Marks & Spencer in October, will be up to the task. Halfords’ shares rose 1pc, or 3.1p, to 315.8p.
Avocet Mining has once again extended a standstill agreement with creditors, this time until August 25, as it struggles to keep open its mine in Burkina Faso, West Africa.
The mine has been plagued by disruptions, including a twomonth shutdown, of late because funding for operations has been hit by the need to make overdue payments to suppliers.
This came after bailiffs representing a group of ex-workers who were claiming unpaid back pay seized a 1,400 ounce gold ship- ment last year. Shares fell 5.8pc, or 2p, to 32.5p.
DX Group’s return to the London market was met with a considerable lack of fanfare.
The parcels firm suspended its shares in March after receiving a £40m offer from Scottish delivery firm John Menzies (down 0.6pc or 4.5p to 695.5p) consisting of a cash payment and new shares worth 65pc of the enlarged company.
But the deal – already been clouded by a police investigation into DX which was later dropped – was called off earlier this month after Menzies said an audit into DX concluded that any offer would need new terms. After falling by as much as 10pc in morning trading, DX shares closed down 2.6pc, or 0.25p, to 9.25p.
Joe Clayton, the chief executive of Management Resource Solutions, has stepped down less than a week after the business support services firm posted a profit warning. Clayton’s departure was welcomed by investors, with shares rising 20.8pc, or 0.62p, to 3.62p.