Short-seller sees trouble ahead for ‘overvalued’ publisher Future
THE publisher behind Fourfourtwo and Total Film has come under attack from a short-seller that claimed its strategy is flawed and its shares are overvalued.
Shares in Future dropped as much as 18pc after London-based research group Shadowfall labelled it “a collection of generally low-quality, often distinct and shrinking assets” and revealed it was shorting its stock. Short-selling is a technique used by some traders seeking to profit on a bet that a company’s shares will fall in value.
In a 68-page report, Shadowfall accused the publisher of overstating its organic revenue growth by 10pc, claiming the real figure was closer to 1pc. It questioned Future’s underlying earnings growth, which it said had been boosted by acquisitions.
Shadowfall accused Future’s management of having “cashed in” on the publisher’s streak of rapid growth, which has seen its share price rise more than tenfold over the past three years.
A spokesman for Future declined to comment. Data from Markit shows short interest in the publisher’s shares at around 2.1pc.
The FTSE 250 group has been a standout performer among London’s mid-cap firms in recent years, leveraging “evergreen” content across its specialist brands to drive digital growth.
It has made a string of acquisitions, including buying TI Media – the publisher of magazines such as Country Life and Homes & Gardens – for £140m, bringing its total portfolio to 220 titles. In November, its directors raised eyebrows in the City by shedding around £44m worth of shares, £14m of which were sold by its chief executive Zillah Byng-thorne.
In its report, Shadowfall – which is led by former analyst Matthew Earl – said Future “appears to us to be a monumental example of shareholder exuberance”, claiming that the group has been able to acquire assets on the cheap because of the “low” quality of its purchases.
Future ended down 242p at £12.80, the biggest faller on London’s main market during a day of fresh coronavirus-driven losses across global stock indices.
The FTSE 100 closed off 1.3pc at 7,286 as bourses fell across the Continent, following news that two cases of the virus had been confirmed in the UK.
London’s mining firms were once again the biggest victims as worries about the global spread of the virus – which emerged from Wuhan, a city at the core of China’s industrial heartlands. Evraz led the fallers, dropping 15.8p to 352.6p, and followed by Antofagasta, Anglo American, Rio Tinto, Glencore and BHP.
Royal Dutch Shell and BP shed 46p to £20 and 10.4p to 456.7p respectively amid worries for global oil giants. Rival US firms Exxon and Chevron both posted their weakest results in years yesterday. Among climbers, energy group SSE rose 7.5p to £15.09 after saying its financial outlook remained in line with its most recent explanation, despite a lack of progress in the planned sale of its gas assets in the North Sea. Elsewhere, drinks maker
Britvic rose 50p to 926p after reporting first-quarter revenues of £369.8m and saying it expected to annual results would be in line with forecasts.