Short-sellers ramp up bets against Just Eat
Bankers at JP Morgan gave the short- sellers snapping at the heels of Just Eat something to get their teeth into with a downgrade of shares in the takeaway delivery group.
Hedge funds including Crispin Odey’s investment business have been building short positions in the FTse 100-listed group with around 6pc of its share capital now on loan to speculators betting on a price fall.
Just why they would do this comes down to Just eat’s strategy. With Uk growth slowing, activist investors think it should merge with an online rival – Deliveroo, Uber eats or Takeaway. so far, management has resisted such calls.
JP Morgan, meanwhile, said Just eat’s structural problems are becoming more visible. In a note on the home delivery sector, it cited a slowing Uk base, exposure to ‘less attractive restaurants’, cannibalisation and poor tech.
adjusting the value of the domestic operation, the Us bank slashed its price target for Just eat to 682p from 822p, and its share recommendation to ‘underweight’ from ‘overweight’. The shares fell 2.7pc, or 19p, to 680p.
Publisher Pearson was also down in the dumps as its shares fell 2.1pc, or 17.8p, to 812.4p, following the merger of rivals Cengage and McGraw Hill.
Going in the opposite direction was Lloyds Banking Group – up 1.7pc, or 1.03p, at 63.6p – after it said the regulator had allowed it to release an estimated £1bn from the capital buffer it keeps as protection from unexpected losses.
analysts reckon this will allow Lloyds to buy back more shares in the business, which, theoretically, should give investors a boost. For the first quarter, UBs expects Lloyds’ profit to rise to £1.78bn from £1.60bn on lower operating costs.
The FTSE 100 suffered the collywobbles ahead of the Us Federal reserve’s decision on interest rates after the London market closed. a higher pound ahead of the Bank of england’s own decision on borrowing costs later today hit the index’s foreign currency earners, leaving the index nursing a 28.01 point loss as it closed at 7385.26.
If Sirius Minerals investors ended april in shock, they began May in confusion – how could a share placing be priced at the bottom of the range and also be oversubscribed?
The Uk mine developer’s share price opened another 16pc lower in early deals after announcing that the equity portion of its large- scale project financing would now amount to £325m.
Pitched at 15p per share, the cash call was marked at a 31pc discount to Monday’s closing price.
some bargain-hunters might be surfacing as the sell-off appeared to have eased by the close as sirius ended a second torrid session 2.4pc, or 0.42p, lower at 17p.
Dropping down to aIM, financial services firm Octagonal shed 11.1pc, or 0.2p, to 1.6p after cautioning that its stockbroking and asset custody unit has experienced a 41pc fall in profits and a 17pc decline in sales. a profit warning also hit Redhall
Group as the Wakefield manufacturing firm conceded that its steel fabrication business, Jordan Manufacturing, has suffered delays in projects tied to a major nuclear infrastructure programme as a result of design changes.
Consequently, redhall now expects its full-year trading performance to be materially below its previous expectations. stock dropped 26.3pc, or 0.38p to 1.05p.