The Mail 14/08/19 - Vox Markets | Vox Markets

The Mail 14/08/19

The feared American law firm that won Enron investors a record £6billion is targeting BT Group (BT.A) over its Italian accounting scandal. Robbins Geller Rudman & Dowd is set to file a case against the telecoms giant within days on behalf of US shareholders, the Mail understands. The defendants named in the lawsuit include BT as well as former chief executives Gavin Patterson and Lord Livingston. The law firm is seeking to recover damages shareholders suffered when BT disclosed a massive fraud at its Italian business. The announcement two years ago – and an accompanying £530million writedown – sent the shares crashing by a fifth and wiped almost £8billion off its market value. BT accused staff and bosses at the foreign division of cooking the books to artificially inflate earnings, behind the backs of UK bosses. But the lawsuit brought on behalf of US investors takes aim at BT executives in London as well. It disputes claims they were ‘kept in the dark’ about problems in Italy and accuses them of withholding crucial information from the market.

The under-fire bosses of Burford Capital (BUR) scooped almost £120million selling shares last year – 15 times the amount they have since spent buying stock back as they attempt to shore up investor confidence. Chief executive Chris Bogart sold 4.4million shares for £59.4million in March 2018, while chief investment officer Jonathan Molot raked in £57.8million, offloading 4.3million shares. The American pair were still left with stakes worth £117million and £115million respectively, underlining the fortunes they have made since founding the litigation funding firm a decade ago. Having listed at 100p each in 2009, the shares peaked at 2045p in August last year, just months after Bogart and Molet sold a third of their stakes at 1350p a share. But the shares tumbled 56% in just two days last week following an attack from US hedge fund Muddy Waters. Bogart, who is married to Burford’s finance director Elizabeth O’Connell, and Molot have taken advantage of the rout to buy up stock, paying between 663p and 856p a share.

Sports Direct International (SPD) boss Mike Ashley has handed his future son-in-law another £5.35million for his work at the business. Michael Murray is engaged to Anna, Ashley’s eldest daughter, and was paid through his firm MM Prop Consultancy. It comes after the 29-year-old was tasked with delivering Ashley’s ‘elevation’ strategy, which involves taking its stores upmarket to attract luxury brands. Sports Direct’s annual report yesterday said Murray had been providing ‘property consultancy services’, with his payout linked to how many new stores he was able to find and negotiate the purchases of. It follows a £5.2million windfall the previous year. His largesse stood in stark contrast to cash meted out to other key figures at Sports Direct.

Muddy Waters has called on the City watchdog to beef up scrutiny of Burford Capital (BUR). In an effort to turn the spotlight away from itself, the hedge fund handed its 25-page dossier to the Financial Conduct Authority (FCA), urging it to seize internal emails from Burford. It came a day after Burford contacted the FCA after uncovering alleged ‘illegal market manipulation’ since a report by Muddy Waters prompted a fall in its shares last week. Muddy Waters said suggestions it manipulated the share price were false. ‘You, Burford, help drown the courts in more litigation, which is not something the world needs more of,’ said Muddy Waters. ‘We are happy to take a moral – and legal – purity test against you.’ The hedge fund wants the FCA to investigate whether Burford’s management used non-standard accounting to mislead investors.

Andrea Leadsom has been urged to intervene in the £4billion takeover of defence group Cobham (COB) to protect the UK’s national interests. In a letter to the new Business Secretary, Liberal Democrat MP Chuka Umunna said that the company provided vital capabilities to the armed forces. Umunna, who is his party’s business spokesman, described Cobham as one of the jewels in the crown of UK industry but claimed it was being ‘sold on the cheap’. His intervention is the latest sign of growing opposition to a bid by American buyout firm Advent International to take the British company private. Critics, including the Cobham family, say the deal could cause jobs and expertise to be lost from the UK’s defence industry. Umunna claimed the takeover also risked loading Cobham with ‘excessive’ debt.

The grounding of Boeing’s 737 Max jets has rocked profits at holiday firm TUI AG Reg Shs (DI) (TUI) and aviation services group Menzies(John) (MNZS). Tui has estimated the crisis will cost it as much as £278million between March and September. And John Menzies said it was a factor that pushed it into the red. Boeing’s worldwide fleet of 737 Max planes, its fastest-selling aircraft, were temporarily taken out of service in March following the second of two deadly crashes that killed 346 people. Tui, Europe’s biggest holiday company, has racked up costs from disruption to flight schedules, leasing replacement planes and hiring extra crew members.  Tui chief executive Fritz Joussen said: ‘It’s a critical situation, with the jet on the ground now for almost five months. It’s a lot of stress.’ Its loss widened from £108million to £299million, even though sales rose 2.4 per cent to £10.6billion in the nine months to June 30. It also said the fall in the value of the pound was putting people off booking holidays abroad. John Menzies plunged into the red in the six months to June 30, posting a £4.4million loss compared with a profit of £8.3million in the same period of the year before. Chief executive Giles Wilson also said airlines were failing to fly to their stated schedules, a fact compounded by the grounding of Boeing 737 Max craft.

A No Deal Brexit would create ‘mild disruption’ at best because of the preparations being made by Boris Johnson’s Government, The boss of High Street giant Next (NXT) claimed. Chief executive Lord Wolfson of Aspley Guise said he will be ‘much less frightened’ of the UK leaving the EU without a deal if the Government is well prepared – and he has ‘every indication’ they are now taking it seriously under the new Prime Minister. The peer has updated his position because of the change in political leadership, having warned in December that No Deal could lead to ‘chaos and disorder’, especially at the UK’s ports. He was sharply critical today of the no-deal planning by Theresa May’s administration, insisting there was ‘almost a wilful attempt’ to not prepare as they did not want to admit it could happen. The Conservative peer, a prominent Leave campaigner, said the required level of confidence, energy and vigour ‘certainly wasn’t’ in Mrs May’s Government.

Aston Martin Holdings (AML) should be more like its arch-rival Porsche. That’s what analysts at Credit Suisse have said about the car maker. They warn that it is too dependent on the UK and would improve if it had a better spread of sales across the world – like those of its more diversified German peer. Turning sour on the company behind James Bond’s favourite marque, Credit Suisse downgraded its rating to ‘neutral’ from ‘outperform’ after a recent profit warning and slashed the target price on its stock by more than two-thirds to 529p.  That made grim reading for a firm that floated at 1900p ten months ago and has only seen its value crumble since then. Added to this, the Financial Times reported hedge funds have taken record short positions in the company by buying up its debt.

Plus500 Ltd (DI) (PLUS) investors were able to see past the fact that it reported a more-than 80% plunge in pre-tax profit, coming in at £53million, and a 68% fall in sales to £123million between January and June. Shareholders instead focused on a slew of more positive updates, including Plus 500 sticking to its guidance for the full year, adding new customers, revealing plans to hand more cash back to shareholders and to buy back up to £41million worth of shares.

Card Factory (CARD) rang up higher half-year sales despite a weaker Father’s Day quarter as fewer customers hit the high street. Like-for-like sales rose 1.5% in the six months to July 31. It has taken extra costs for stockpiling ahead of the October 31 Brexit deadline as it puts in place contingency plans. It did not give details on stockbuilding, but said in April that it had bought in extra goods amid concerns over ports disruption.

Sirius Minerals (SXX) jumped 1.38p, to 9.5p in an impressive rebound. It had dipped after it said it would delay fundraising a £415million bond because it is worried the market isn’t trading well enough. The share price leap could show that investors are more optimistic that the bond raise will be successful – building its mammoth mine in Yorkshire is contingent on raising the funds, after all.

Revenue at housing and care services specialist Mears Group (MER) was boosted by its acquisition of Mitie’s social housing arm, MPS, in November for £35million. Its turnover rose 10 per cent to £481million, while pre-tax profit fell 3 per cent compared with the same period last year, coming in at £12.5million.

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Mentioned in this post

AML
Aston Martin Holdings
BT.A
BT Group
BUR
Burford Capital
CARD
Card Factory
COB
Cobham
MER
Mears Group
MNZS
Menzies(John)
NXT
Next
PLUS
Plus500 Ltd (DI)
SPD
Sports Direct International
SXX
Sirius Minerals
TUI
TUI AG Reg Shs (DI)