The Mail 11/06/19 - Vox Markets | Vox Markets

The Mail 11/06/19

Furious traders have wiped £1.5billion off the value of Hargreaves Lansdown (HL.) amid a backlash over its cosy relationship with Neil Woodford. Shares in the online fund supermarket fell for the fifth day in a row on Monday, as Hargreaves was forced to deny that ripples from Woodford’s calamity will cause problems for its own in-house funds. And analysts warned it could lose almost £3million in missing fees alone form the meltdown. The value of Hargreaves has fallen by 15% or £1.5billion since Woodford was forced to stop withdrawals from his flagship Equity Income fund on Monday last week. There are questions over whether the fallout will hit Hargreaves’ own-brand Multi-Manager funds, where in-house experts choose a range of fund managers to invest savers’ money in. Around £620million has been invested in Woodford Equity Income through these funds. In an effort to allay investors’ concerns yesterday, Hargreaves emphasised the total invested in Woodford Equity Income ‘is just 6.2 per cent of the total value of our Multi-Manager funds’.

Ocado Group (OCDO) has taken another step away from food delivery and towards technology as it unveiled plans to expand into food production with two major investments in vertical farming. The online grocer, which is focused on growing and diversifying its tech solutions arm, said it has splashed out £17million on a majority stake in Jones Food Company and a joint venture to build technology for vertical farming. Vertical farming is when food is grown at indoor facilities in multi-level vertical stacks. It allows growers to fit a lot of produce into a small space and make it available all-year round. This method has become more popular in recent years as it is often seen as an answer to provide local, fresh food to a growing urban population. It is also considered to be more sustainable, as it uses less water, less space and lower wastage than traditional agriculture methods.

Housebuilder MJ Gleeson (GLE) saw its shares tumble 11 per cent today, after its boss stepped down in a bust up over his pay. The developer specialises in building affordable homes in the North and land regeneration and hit the headlines last year when chief executive Jolyon Harrison was paid £2.9million. In a statement yesterday MJ Gleeson said: ‘Following extensive discussions with Mr Harrison regarding his remuneration and succession planning, the Board concluded that it was not possible to find a mutually acceptable basis for Mr Harrison to continue as Chief Executive Officer.’ Mr Harrison has been in charge of the builder since July 2012, having joined its board in 2010, and has been paid about £12million in total, according to its annual report.

Sainsbury (J) (SBRY) and Asda hiked prices across hundreds of products as their £14billion merger was blocked. The grocers have pushed up the cost of around 500 own-brand goods such as biscuits, cakes, soft drinks, cooking oil, sauces and spreads. Other items affected include cereal, bacon, sausages, ready-meals and frozen fish, according to The Grocer magazine. Sainsbury’s and Asda suffered a humiliating defeat when their planned tie-up was blocked by the Competition and Markets Authority in April. A total of £1billion worth of price cuts passed on to customers had been promised as part of the deal.

Shares in Woodford Patient Capital Trust (WPCT) fell again despite reassurances by its board that it is pleased with the progress of its investments. The trust, which is listed in the FTSE 250 saw shares tumble last week after investors were spooked by Woodford’s shock decision to ban investors from withdrawing money from his flagship equity income fund. The fall sent Patient Capital shares down to a 28.3% discount to the trust’s net asset value – the sum total of the assets they hold. ‘The board is pleased with the operational progress of its portfolio companies, which the board believes continue to have the potential to deliver attractive returns, in line with the long-term mandate of the company,’ the business said in a statement. ‘The operational performance of these businesses is not impacted by recent events,’ it added.

West African gold producer Avesoro Resources Inc. (DI) (ASO) has warned that production at its mine in Burkina Faso will grind to a halt if a labour dispute isn’t resolved within the next two days. The company is planning to contract out its mining work, to reduce costs and increase the volumes of gold it mines. But, faced with the threat of losing their jobs, miners have refused to work.

Ocado Group (OCDO) was growing on investors after it announced two investments worth £17million in skyscraper farming firms. So-called vertical farming, where produce is grown in vertically stacked layers or up the sides of buildings, is being hailed as the future of the industry. As populations soar, and space runs at a premium, it should allow farmers to grow much more with much less land. Ocado’s first investment is in a new joint venture, called Infinite Acres, formed with US indoor farming company 80 Acres and Netherlands-based horticultural systems business Priva. Each business will own a third of Infinite Acres, and Ocado will make an undisclosed cash investment and loan. As its second deal in the sector, Ocado has snapped up a 58 per cent stake in Scunthorpe-based Jones Food Company, Europe’s largest operating vertical farm. Jones Food is producing leafy greens and herbs for UK customers, and with its 12 kilometres of LED lights is able to produce consistent crop yields all year round. Tim Steiner, Ocado’s chief executive, said: ‘We believe that our investments today in vertical farming will allow us to address fundamental consumer concerns on freshness and sustainability, and build on new technologies that will revolutionise the way customers access fresh produce.’ The aim is to have vertical farms next door to all of Ocado’s delivery warehouses, Steiner added, so fresh produce can be sent to a consumer’s kitchen within an hour of it being picked.

Plumbing giant Ferguson (FERG) weighed on the blue-chip index, as it revealed its growth in the US was falling short of what was hoped for. The company said profits for the whole year should still be in line with expectations. For the three months ending April 30, the third quarter of its financial year, revenue across the whole Ferguson group was up 7.3% year-on-year to £4.2billion. The company also announced a £394million share buyback.

Accrol Group Holdings (ACRL) was beginning to pull investors back on board after a torrid couple of years. The toilet-roll specialist said that in the last quarter of its year to April 30, following a turnaround which saw it ditch several of its less profitable contracts, performance began to improve. Total revenues for the year were around £119million, similar to the previous year. But toilet-roll sales were up around 12% to £85million.

Scapa Group (SCPA), which makes the sticky part of wound dressings as well as industrial adhesives, jumped 19.4p, to 183p as its chief executive made an extraordinary U-turn. Heejae Chae had announced his intention to step down last month, but yesterday said he had retracted his resignation. It seems the indecisive boss had his interest sparked by a potential legal case with medical dressings maker Convatec Group (CTEC). Earlier this month, Convatec said it was terminating a contract with Scapa – a move which Scapa maintains is unjustified. The termination could knock Scapa’s revenue by £28million, and profit by £13million, but the business said it will pursue ‘all appropriate rights and remedies’.

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Mentioned in this post

ACRL
Accrol Group Holdings
ASO
Avesoro Resources Inc. (DI)
CTEC
Convatec Group
FERG
Ferguson
GLE
MJ Gleeson
HL.
Hargreaves Lansdown
OCDO
Ocado Group
SBRY
Sainsbury (J)
SCPA
Scapa Group
WPCT
Woodford Patient Capital Trust