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Gervais Williams: the real reason to worry about Quindell

Citywire AA-rated manager Gervais Williams has argued that sentiment is the true danger to Quindell.

Williams noted that the processor of insurance claims – which has been attacked by short sellers, including Gotham City Research – is performing well in its underlying business.

Indeed, today Quindell revealed that in the first half of the year its gross sales had surged by 118% to £364 million and pre-tax profit by 292% to £154 million.

Williams instead expressed concern that Quindell – from which he has enjoyed a strong share price appreciation since initially buying in – could suffer if its clients start to worry about the bear raiders.

The veteran investor ranks second in the Citywire UK Smaller Companies sector over the past three years, returning 76.9% compared with a peer group average of 49%.

His Diverse Income Trust tops its UK Growth & Income category over the same period, generating 91.9% in net asset value terms.

Despite this exceptional run, Williams believes that we are only ‘in the foothills of a long period of small cap outperformance’.

He also shares some of his favoured stock picks, including some ‘desperately cheap’ new issues.

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