Odey piles into Plus500 as crisis hammers shares
INVESTORS in Plus 500 were nursing their fifth consecutive day of losses as the fallout from its £80m accounting error continued.
In a note to clients yesterday, analysts at Canaccord Genuity called the financial firm’s mistake a ‘disturbing revelation’, which had caused a ‘breakdown in trust between company and investors’.
It released its accounts last week which showed it had made an £80m loss from client trading in 2017. This number had not appeared in the 2017 figures. At the time, the company had said it did not make any losses from client accounts.
Though Plus 500 later added the error did not affect its overall reported profits, Canaccord’s analysts said that a ‘cocktail of declining earnings, ongoing regulatory reviews and questions about integrity’ now meant their bets were on the shares falling further.
Shares slid 12.5pc, or 115p, to 806.5p meaning a massive £942m has been wiped off the FTSE 250 company’s value since the mistake came to light last Tuesday. But one investor was snapping up the cheap stock. Odey Asset Management, the hedge fund firm run by 60-year- old Brexiteer Crispin Odey, revealed it had raised its stake from 13.3pc to 14.5pc as the shares slid last Thursday.
Odey had been selling down his stake in the weeks leading up to Plus 500’s wipeout, offloading millions of shares just days before their value plummeted.
Between the beginning of the year and last week’s announcement, during which time Plus 500’s shares had been climbing, Odey had cut his stake from 12pc to 9.7pc.
But since their value has almost halved, the hedge-fund tycoon has bought back even more shares for a fraction of the price at which he sold them.
Unlike Odey, who will be hoping the shares rise again so he can flog them for a profit, a number of other hedge funds are betting on Plus 500 to fail. Six firms have bought sizeable so- called short positions in the business since the beginning of the year, meaning they will pocket more cash if the shares tumble further.
The FTSE 100 was treading water, as investors awaited news from Theresa May’s latest Brexit trip to Brussels. The index edged back 0.2pc, or 17.21 points, to 7219.47 points.
After releasing better- thanexpected results last week for the 18 months to October, software firm Micro Focus was among the top risers as brokers gave it a boost. Analysts at Stifel lifted their target price for Micro Focus’s shares from 2013p to 2236p, following signs the firm was recovering from its disastrous takeover of Hewlett Packard Enterprises. Shares jumped 4.1pc, or 68.5p, to 1748.5p. Engineer Spirax-Sarco also helped pull the blue- chip index up, announcing it was in late-stage talks to acquire specialist cable manufacturer Thermocoax for £139m. Its shares lifted 1.1pc, or 75p, to 6755p.
Among the stock market’s smaller companies, car retailer
Pendragon – which owns the Evans Halshaw showrooms and online marketplace Car Store – edged higher as it appointed a replacement for retiring veteran boss Trevor Finn. Mark Herbert, former chief executive of car dealership Jardine Motors UK, will start at Pendragon on March 4 and join the board in April.
Shares climbed 0.9pc, or 0.25p, to 27.25p. Yourgene Health, which develops tests to screen for medical conditions in unborn babies, jumped 5.8pc, or 0.75p, to 13.75p after long-term partner Life Technologies became a major shareholder. Life Technologies, owned by US healthcare giant Thermo Fisher, exercised its right to buy more than 41m newly created Yourgene shares for 9.2p each.