Allied Minds hit by hedge fund’s attack

INVESTORS including star fund manager Neil Woodford are nursing heavy losses after a New York hedge fund launched a blistering attack on Allied Minds – a company once dubbed ‘the London market’s best kept secret’.

Allied Minds, a venture capital firm that funds and builds technology companies out of ideas formed in university laboratories, saw its shares rocket from 190p when it floated in June last year to a high of 725p in April this year.

The stock then settled at around 450p to 500p – but has tanked this week after hedge fund Kerrisdale Capital Management said the company was hugely overvalued.

‘Allied Minds is a true triumph of mind over matter, style over substance – a dressed-up collection of high-risk, low-reward gambles that we believe has at least 70pc downside,’ it said on Tuesday.

The analysis sent Allied Minds shares tumbling and the stock closed down another 15pc or 66p at 375p yesterday. Shares have now fallen 140p or 27pc since closing at 515p on Monday.

Kerrisdale says in its research note that it is betting against Allied Minds shares and would ‘realise gains in the event that the price of the stock decreases’.

A City source said the analysis appeared to be ‘somewhat selfserving’, adding: ‘ In nervous markets this sort of thing is not difficult to do. Whether it’s moral is another question.’

Analysts at investment bank Jefferies still rate the stock as a ‘buy’ and have a target price of 584p.

The slump in the share price has proved costly for Woodford and his investors. Woodford holds around 50m shares or 23.24pc of Allied Minds in his Equity Income Fund and Patient Capital Trust.

That was worth some £257.5m on Monday but just £187.5m last night – a loss of £70m.

Woodford is the second-largest shareholder in Allied Minds after Invesco Asset Management, which owns 34.36pc of the firm.