Ac­tivist in­vestor’s eye for bar­gain brings a halt to Burberry plunge

The Daily Telegraph - - Markets - TOM REES MAR­KET RE­PORT

BURBERRY’S freefall on the FTSE 100 came to a sud­den halt af­ter Bel­gian ac­tivist in­vestor Al­fred Frère seized the op­por­tu­nity to snap up the fash­ion house’s shares on the cheap fol­low­ing a two-day plunge in­duced by its shift in strat­egy.

Mr Frère raised his stake in the de­signer from 4pc to 6pc af­ter spooked in­vestors sent its shares spi­ralling lower on a new up­mar­ket strat­egy to “sharpen” the brand.

Mr Frère is renowned for crank­ing up the pres­sure on boards to im­prove re­sults and bumped up his stake in the firm through his in­vest­ment ve­hi­cle GBL En­ergy Sarl, which he con­trols with Canada’s Des­marais fam­ily. The bil­lion­aire has helped turn around sports­wear giant Adi­das in re­cent years and the stake in­crease makes GBL the third largest share­holder in Burberry.

Af­ter shares ral­lied to a record high of £19.85 on Wed­nes­day, new chief ex­ec­u­tive Marco Gob­betti made Burberry out of vogue in one fell swoop the next day. An­a­lysts ex­tended the trench coat maker’s shares plunge into a sec­ond day with a slew of down­grades and slashed tar­get prices. UBS an­a­lyst He­len Brand told clients in her down­grade to “neu­tral” that the costs and time to do the re­struc­tur­ing, which will lead to stores in less lux­u­ri­ous lo­ca­tions clos­ing and other sites spruced up, are more than ex­pected.

Burberry plunged 4.6pc in early trade be­fore spik­ing to a 1pc gain as news broke of GBL’S stake. Bear­ish sen­ti­ment took hold again and it fi­nally set­tled down 41p, or 2.3pc, at £17.46.

Else­where, Bunzl is highly vul­ner­a­ble to Ama­zon’s foray into the B2B mar­ket, Mor­gan Stan­ley warned, send­ing the blue-chip dis­tri­bu­tion giant slid­ing to the bot­tom of the FTSE 100. Bunzl is more at risk from the on­line giant flex­ing its mus­cles in the sec­tor than French peer Rexel and the two firms could still be wounded in a scrap for mar­ket share even if Ama­zon fails. Some Bunzl share­hold­ers weren’t ready for the fight and the firm dipped 151p to £21.57.

Af­ter com­ing out of Thurs­day’s global re­treat on stock mar­kets largely un­scathed, the FTSE 100 suf­fered worst in Europe yes­ter­day, pulling back 51.11 points to 7,432.99, as the weak­ness in equities ex­tended into a sec­ond day.

In­ter­net of things provider Telit

Com­mu­ni­ca­tions soared as high as 11pc on City chat­ter that its Chi­nese top share­holder is look­ing to dou­ble its cur­rent 14pc stake by snap­ping up shares from in­sti­tu­tional in­vestors ahead of a takeover bid. With pri­vate equity firms said to also be sniff­ing around the Tesla sup­plier, in­vestors piled into the Aim-listed stock lift­ing it 12.5p to 187p. De­fence group Ul­tra

Elec­tron­ics nose­dived 190p, or 11pc, to £15.27 af­ter a US Depart­ment of Jus­tice de­ci­sion re­gard­ing its ac­qui­si­tion of Spar­ton was de­layed un­til the end of March.

The FTSE 250 firm had ex­pected a ver­dict by the end of this month and the hold-up for com­ple­tion of the $234m (£178m) ac­qui­si­tion for the US navy sup­plier could be ex­tended fur­ther, ac­cord­ing to Liberum.

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