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Henderson duo hit as HMV falls into administration

by Dylan Lobo on Jan 15, 2013 at 08:46

Henderson duo hit as HMV falls into administration

Henderson Global Investors has taken a small hit from the demise of HMV, while a number of wealth firms have positions in the collapsed retailer likely to be held on behalf of execution only clients.

The music retailer plunged into administration and put 4,000 jobs at risk after last ditch talks to save the firm failed. 

The news comes after the firm warned before Christmas if faced material uncertainties and it was locked in talks with its lenders over its banking covenants.

In a statement issued last night the HMV said: ‘The board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect. 

'The directors of the company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business.'

Henderson Global Investors, which at one point was the biggest investor in HMV with a 12% stake, is among those impacted by the news.  

According to an Argus Vickers' shareholder register dated 14 November, Adam McConkey and Harmesh Suniara’s Henderson Fledgling Trust owned around 30.5 million shares in the firm equating to a 7% interest.

The pair has since been selling down its holding, which Henderson confirmed is now around two thirds lower at 10 million shares, or 0.13% of the fund.

Meanwhile the Henderson Cautious Managed fund, run by Chris Burvill, John Pattullo and Jenna Barnard, owned around 2.9 million shares accounting for a little less than 0.7% of the firm and 0.01% of the funds its equity component

Henderson also owned 18.4 million contracts for difference representing a 4.3% stake on 14 November, which it has sold over the last few weeks.

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11 comments so far. Why not have your say?

Keith Cobby

Jan 15, 2013 at 09:09

Why has a 'cautious managed' fund invested in HMV. It has been obvious that its end was near for a long time. I feel for the staff but the firm was hopelessly uncompetitive.

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Anitaki

Jan 15, 2013 at 09:22

@ Keith Cobby > +1 Agree > It is rather like investing in carbon paper or typewriter ribbon manufacturers years ago because their price looked cheap.

Fund managers have a duty to think to the future before they rush to invest just because the share price is at a historic low. Some companies adapt, some don't. HMV were too late. The internet will cause more casualties yet in the High Street. Any retailer is not a low risk investment now.

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wildbill

Jan 15, 2013 at 09:23

C Mgd indeed.....do I hear the FSA telling investors to complain then, as this was clearly High Risk!, even tho part of a diversified portfolio!!!!!!

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Usually found sitting on the fence

Jan 15, 2013 at 09:48

Surely it is not as simple as seeing HMV failing and question why it was part of a cautious managed fund. There are many other aspects to consider, which includes price paid and dividends received into the fund. Then there is the reasoning behind their decision, such as the perception that HMRC would be going after HMV's cheap online rivals, which may have made HMV more competitive.

A number of years ago, I remember M&S were in dire straits and the share price was incredibly cheap. I, like many, thought it was the end... But look where they are now! Does that mean I would have bought into HMV, No, but I don't have millions of pounds of others money with which to make that gamble...

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Julian Stevens

Jan 15, 2013 at 10:06

I recently spotted an album in our local discount music store, priced at what seemed to be a very reasonable £4. I then found the same item online for 1p which, I think, tells us pretty loud and clear just what high street retailers are up against and have been for years. Much the younger generation doesn't even buy CD's any more.

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Hickky

Jan 15, 2013 at 10:31

A managed fund historically invested in funds within the same investment house. I always felt there was a tendancy for firms to use their managed funds to prop up some of their individual funds that were experiencing large redemptions. If this is the case with this Hendersons cautious fund, then it is unsurprising that some holding in their fledgling fund was made. Cautious means different things to different people, however if a cautious fund is invested in 60%+ loan stock, to comply with a peer group classification, then it will need to find some more exciting stock for the remaining 40% in order to try to get itself up the quartile rankings.

I do my upmost to avoid all managed funds for my clients as I cannot look at the overall diversification of their portfolio, as this type of investment is supposed to diversify internally. They are not a one stop shop typically sold to clients with small sums to invest as their longer term performance against diversified portfolios that alter the geographic and asset class allocations occasionally, but always remaining personal to the client's needs.

So am I surprised that the Hendersons Cautious Managed fund had 0.7% invested in HMV? No. It rather looks like the Cautious Managed fund had a 10% holding in the Fledgling fund. so much for speculation, onwards and upwards!

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Anitaki

Jan 15, 2013 at 10:46

@ Hickky

Whereas that used to be my approach too, the FOS didn't agree when they found for a client who l had invested for on a similar basis. It was the only claim against me, and it overturned the FSA's decision.

It wasn't helped by the adjudicator only having English as a second or third language and the fact that the client had been approached by an FSA who worked for a firm of ambulance chasers who re-wrote the claim for her even though of course they weren't there..

Whereas your reasoning is sound, it cost me plenty.

Don't risk it

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Martin Bamford

Jan 15, 2013 at 14:49

What's a CD?

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wildbill

Jan 15, 2013 at 15:37

Claealy too much time on yr hands now yr not an RI anymore!

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Julian Stevens

Jan 15, 2013 at 15:43

See http://en.wikipedia.org/wiki/Compact_Disc

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Martin Bamford

Jan 15, 2013 at 16:30

@wildbill

What's an RI?

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