Activists sweep the board. First Group under pressure as De La Rue caves in to investor demands. The growing influence of activist investors on British companies was demonstrated yesterday as an American hedge fund gathered support from big City shareholders for its overhaul of FirstGroup (FGP) and a UK fund claimed victory in driving boardroom changes at De La Rue (DLAR). A campaign by Coast Capital, a New York-based activist, to clear out more than half of First Group’s board and to break up the transport company was boosted by a report on Sky News that Schroders and Columbia Threadneedle Investments opposed the re-election of Wolfhart Hauser, First Group’s chairman, on the eve of today’s extraordinary meeting. Investors in First Group will vote on proposals put forward by Coast to replace six directors, including Mr Hauser, 69, who used to run Intertek, the testing company, and Matthew Gregory, 49, its chief executive of only about six months.
An online retailer backed by the family of Sir Philip Green has put itself up for sale after a turbulent spell on the stock market. Shares in Mysale Group (MYSL) slumped after it said that it had launched a strategic review to consider “all types of corporate activity”, including a sale of all or part of the group, a fundraising to support an overhaul or a delisting from London’s junior stock market. It comes after a volatile five years as a public company, which began with a botched flotation on Aim in 2014 — when Macquarie, the stockbroker sponsoring the issue, mistakenly priced the stock in pounds rather than pence — and which was punctuated by profit warnings. Mysale said that disruption from a restructuring of the business was having “some temporary negative effect” on trading and that it might need extra funds in the short term to support the turnaround.
Goals investor cries foul over Ashley ‘bullying’. The second biggest shareholder in Goals Soccer Centres (GOAL) has accused Mike Ashley of “bullying” after the head of threatened to vote his stake in the five-a-side operator against the reappointment of all its directors. Chris Mills, 66, founder of Harwood Capital, which has an 18.86% stake in Goals, dismissed last week’s intervention by Mr Ashley as “deeply unhelpful”, insisting that the board was doing its utmost to resolve the company’s financial problems. Sports Direct, which has an 18.92% stake in Goals, said last Friday that it had lost confidence in the six-strong board, which includes Mr Mills, over its handling of the discovery in March of VAT liabilities of at least £12 million. It accused Goals of a “lack of transparency”.
Investors lose patience with Woodford Patient Capital Trust (WPCT). Disgruntled investors are gearing up to demand a boardroom shake-up at the listed trust run by Neil Woodford. Seneca Investment Managers, a Liverpool-based hedge fund, is understood to have approached other institutional shareholders to force changes to the five-person board at Woodford Patient Capital. The group, which has sold shares in Patient Capital in recent days, received support from other shareholders to approach turnaround experts to push through its plan, which a source said amounted to “shareholder action”. The largest investors in Woodford Patient Capital include Blackrock, Alliance Trust and Legal & General. The trust’s board has held discussions with some of its largest shareholders and is in talks to hire an additional non-executive director. A search also is under way to replace Alan Hodson, a former executive at UBS, who left the board last month.
Admiral Group (ADM) sailed ahead yesterday amid City predictions that accelerating insurance prices would send its shares higher. Barclays upgraded the FTSE 100 motor insurer from “underweight” to “overweight”, citing hopes of higher growth in the cost of premiums and the recent underperformance of the shares. Analysts at the bank noted that the severity and frequency of personal injury claims fell by 2% between January and May compared with the previous year. “Our analysis suggests insurance prices have reached an inflection point in [the second quarter], with April-May prices up 4% — a trend that we believe will only be recorded by the wider market when the mainstream quarterly indices are published in the second half of July,” they told clients. Admiral and Hastings Group Holdings (HSTG), its smaller rival, “show the strongest gearing to rising prices”, Barclays said, predicting car insurance premium growth of between 4 and 5% by the end of the year. The share prices of both companies “have historically been highly correlated to movements in premiums”, the analysts added.
Carnival (CCL) struggled after Barclays downgraded the holiday operator behind Cunard and P&O Cruises from “overweight” to “equal weight” and sliced its target price by a fifth to £43.30. Its analysts pointed to persistent challenges in Europe “which could continue into next year”. Barclays added that Norwegian Cruise Line and Royal Caribbean Cruises “face stronger growth catalysts”.
Citigroup cut its target for Drax Group (DRX), the owner of Britain’s biggest power plant, from 312p to 265p, sending the company’s shares down by 16¾p to 275¼p.
Entertainment One Limited (ETO) shares rose 5% after Berenberg launched its coverage of the television and film producer with a “buy” rating. Analysts at the German investment bank reckon that the business, having been disrupted by the growing dominance of streaming services such as Netflix, now stands to benefit from their rise. “With eight more brands in development, further monetisation opportunities in China and the rest of the world and Peppa Pig theme parks, we believe there is a lot more upside to come,” they told clients in a note.
Tempus – Securities Trust of Scotland (STS): Buy. Strong track record and dividend looks set to rise