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Dobell: Gotham City doesn't scare me off Quindell

Tom Dobell, manager of the £7 billion M&G Recovery fund, has backed Quindell, the software outsourcing company hit in an 'unpleasant bear raid' last week.

 
Dobell: Gotham City doesn't scare me off Quindell

Tom Dobell, manager of the £7 billion M&G Recovery fund, has backed Quindell (QPP), the AIM-listed claims outsourcing company which is suing a US short-seller after its share price slumped last week.

Dobell (pictured) bought an 8% stake in the insurance software specialist in November. Last week its share price plunged 40% after Gotham City Research published a note describing it as ‘built on quicksand’. At the time it revealed that it had taken a short position in the stock and would benefit from a fall in the share price. 

Dobell, who had 2.3% of the Recovery fund in Quindell last month, dismissed Gotham’s report as ‘a rather unpleasant anonymous bear raid’ based on ‘spurious information’, although he acknowledged that ‘some of it had some legitimacy’.

Quindell has begun legal action against what it termed a ‘coordinated shorting attack’. It has also published a detailed rebuttal of Gotham's criticism of its accounts. Meanwhile directors of the firm have bought more shares in the company to demonstrate their confidence in its future.'

‘It is obviously going through some growing pains at the moment,’ commented Dobell. ‘It is in transition. We are working closely with the company and its advisers. So far they are responding very well and they have a particularly hard-working, capable chief executive,’ he said referring to Quindell's founder and executive chairman, Rob Terry.

Quindell nevertheless remains a compelling investment for Dobell given what he says is its focus on simplifying the processing of insurance claims.

‘This business has a very interesting proposition in terms of making the industry a lot more effective for everybody.’ Dobell added that Quindell also contained a ‘really interesting’ division in Canada, and a ‘fascinating position’ in the roll out of risk-assessing black boxes for cars.

‘For a combination of those reasons, we supported the company enthusiastically and continue to do so,’ he concluded.

‘We have a thick skin here but we are working with them and I intend to try to help make this company a great success.’

The M&G Recovery fund has struggled in recent years, with a three-year total return of just over 16% compared with an average of 36.3% from funds in the UK All Companies sector. It has rebounded more recently, however, returning 0.7% over the past three months against a sector average of 0.2% and a drop of 0.6% from the FTSE All Share index.

Quindell is also a top holding of Gervais Williams' popular Diverse Income Trust (DIVI ), ranking eighth in the portfolio and accounting for 1.4% of its assets.

You can read more about DIVI's top holdings in the latest issue of Income Investor which looks at how investors can generate income from smaller companies.

5 comments so far. Why not have your say?

peter montgomery

Apr 29, 2014 at 20:54

Strewth! Might come to regret these comments Mr Dobell.Just make sure the M and G Recovery doesnt become the 2014 equivalent of The Slater Walker Dustbin Trust(older investors comment!)

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Carterette

Apr 29, 2014 at 22:03

"Might become" Maybe, Could, possible. Lots of "Ifs" from commentators but little in the way of useful or researched opinion.

Tom Dobell is just one of the fund managers who have included Quindell in their portfolio; Miton, Aviva, and a dozen more remain convinced of the company's value and exciting future. A bear raid by shadowy Hedge Funds and irresponsible newspaper comment has damaged the share and company reputation for a time. However, too many world class insurance names are using Quindell to improve their businesses to warrant the doubt and despondency shown above.

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Stephen Irving

Apr 30, 2014 at 09:15

Scary stuff indeed.

After reading the above I have just asked my financial advisor to dispose of my holding in M&G Recovery fund asap, and to find out who the other "dozen" fund managers are, so that I can sell any holdings I have with them too.

Does Carterette include the ongoing disaster known as RSA (who recently set up a joint venture with Quindell) as one of the "world class insurance names" referred to?

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Paul Scott

May 04, 2014 at 10:22

"The M&G Recovery fund has struggled in recent years, with a three-year total return of just over 16% compared with an average of 36.3% from funds in the UK All Companies sector."

That's a terrible performance, in a bull market. So surely this article proves that as a poorly performing Fund backs Quindell, then it's probably a poor investment?!

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Mark Potter

Jun 05, 2014 at 08:58

Anyone who says they will "tell their financial adviser to sell" is wasting their money paying the adviser. What use is an adviser if you take decisions based on media coverage? Maybe this investor is qualified to read and analyse Quindell's accounts, has understood and dismissed their rebuttal and done some due diligence work on the "shorting" predator. Even then, he won't have a fraction of the knowledge of the business that Tom Dobell has in his position as a major shareholder. And as for the comment about relative past performance over three years, well thank God for such investors - they are the ones who always sell at the bottom and buy at the top and allow the rest of us to make money.

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