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View the article online at http://citywire.co.uk/wealth-manager/article/a748414

Dobell: why I stand by Quindell despite ‘unpleasant bear raid’

by Robert St George on Apr 29, 2014 at 11:25

Dobell: why I stand by Quindell despite ‘unpleasant bear raid’

Tom Dobell, manager of the £7 billion M&G Recovery fund, has committed to supporting troubled Quindell despite its current woes.

Dobell (pictured) acquired an 8% stake in the insurance software specialist in November, but last week its share price plunged 40% after Gotham City Research published a note describing it as ‘built on quicksand’.

Dobell dismissed Gotham’s report as ‘a rather unpleasant anonymous bear raid’ based on ‘spurious information’, while acknowledging that ‘some of it had some legitimacy’.

Quindell has initiated legal action against what it termed a ‘coordinated shorting attack’. The firm accounted for 2.3% of the M&G Recovery fund at the end of March.

‘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.’

Dobell also lamented what he regarded as a tendency in the UK to revel in the problems of entrepreneurs. ‘We love to build them up and smash them down,’ he remarked.

For Dobell, Quindell nevertheless remains a compelling investment given 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.

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2 comments so far. Why not have your say?

Philip Milton

Apr 29, 2014 at 13:20

Regardless of Quindell's prospects or current/past success, the type of behaviour meted-out by Gotham City is unacceptable. If the negativity is all proven, it might be a different kettle of fish but if it is not, the damage to this company is wholly unacceptable and no libel claim by the company can repair the damage - should shareholders too join in the action? It can also damage the underlying business prospects of the company. One almost hopes that other institutional shareholders make a concerted action to buy more stock (regardless of the facts/rumours/accusations) to really burn the short sellers so that they'll feel it where it hurts most - in the pocket.

The regulators on both sides of the Atlantic should act here - there is a difference between a professional, well-founded opinion on a stock and something like this designed to profit short positions taken in advance of the announcement - a form of reverse insider trading almost. Would a big group like Goldman Sachs ever issue such a document, for example?

One wonders next if some other tipster company will announce that it is quite alright to buy life settlement funds and then arrange for a few early demises to boost the returns!

report this

Peter Barrett

May 02, 2014 at 16:09

If the rumours are unfounded there should be a class action against Gotham City

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