Despairing investors in Woodford Patient Capital Trust (WPCT) are in danger of incurring even bigger losses if they hang on to their shares, analysts warned yesterday. On the first day of trading since Neil Woodford resigned as fund manager, shares fell as much as 12% to a record low of just below 30p. They closed at 32.5p, having been worth around 119p in August 2015. But JP Morgan analysts have warned that those desperate to avoid crystallising their losses may get even less back in future. The trust’s board is looking at whether it should appoint a new manager, sell it to another fund management company or wind it down and sell the assets. JP Morgan said that all scenarios will bring risk. Shares have been trading at a huge 50% discount to the estimated value of the assets as investors have shunned it. Yesterday, JP Morgan said: ‘This already includes some hefty writedowns, but it is inevitable that there will be more. We just don’t know how much and when.’It added: ‘An orderly wind-up is the best way forward.’
The competition watchdog has formally launched an investigation into Amazon’s investment in food delivery firm Deliveroo. It follows a multi-million pound deal, part of a £460million fundraising round, which saw the internet retailer attempt to buy a minority stake in the British company. The Competition and Markets Authority (CMA) has suggested this could lead to a full takeover of Deliveroo. It has ordered the companies to temporarily halt the process until its inquiries into the deal are complete. The CMA probe could lead to a more detailed ‘phase 2’ investigation – and possibly prompt it to block the investment.
ASOS (ASC) said profits tumbled 68% in the 12 months to August 31, as it forked out to remedy warehouse issues in Germany and the US, was pipped to the post by rivals on Black Friday and struggled amid weak consumer confidence. Costly investment and rising costs meant the company even swung into debt, with £95million now on its books. Investors appear to have been braced for worse numbers than Asos actually delivered, therefore many have seen today as buying opportunity. Reassuring bright spots in the results include rising customer numbers and a 13% uplift in sales to £2.73billion as its more ‘glam’ shoppers snapped up animal print, broderie and satin. Adam Vettese from eToro said this proves Asos ‘it is still incredibly popular with fashion-conscious twenty-somethings’. But he added: ‘The firm will want to see this progress carried into the new year, meaning this is perhaps the most important Christmas trading period in Asos’ history.’
Barratt Developments (BDEV), said it has the cash to deal with any Brexit fallout in the housing sector. The sector’s economic outlook depends on how Britain leaves the EU, Barratt said, but insisted its net cash balance and the homes it is set to sell this year means it has the ‘resilience and flexibility to react’ to changes next year and beyond. The developer finished more than 3,250 homes in the last 15 weeks and is due to sell nearly 13,000 for more than £3 billion over the financial year. However the average value of the homes it is set to deliver is around £236,800, down from £243,900 last year. Barratt chief executive David Thomas said the company has started its financial year well, showing ‘a good sales rate and a healthy forward order book’. ‘We maintain our focus on the delivery of operational improvements across our business, and our commitment to deliver the highest quality homes across the country,’ he added.
Sativa Investments plc (SATI) has been granted a licence by the Government to grow cannabis in Somerset. The firm said the licence allowed it to grow cannabis that contains more than 0.2% tetrahydrocannabinol (THC), a psychoactive compound. It can now collaborate with researchers looking at the impact of the drug on people with respiratory health issues. Sativa already grows cannabis with lower levels of THC.
Mediclinic International (MDC) was on the rise after issuing a cheery trading update. The company said that profits would be better than expected when it reports half-year results next month, after strong performance in southern Africa and the Middle East. Revenue for the six months to September 30 was about 9% higher than a year ago, while profits were likely to have risen by 5% to about £224million.
Rio Tinto (RIO) reported a 5% rise in iron ore shipments that was helped by strong demand from China. The London-based company shipped 86.1m tonnes of the ore in the three months to the end of September, compared with 81.9m a year earlier. Iron ore typically accounts for more than 60% of Rio’s earnings. It said it still expected iron ore shipments for the year of between 320m and 330m tonnes, however, after a global squeeze on supplies started to ease.
