Soap opera continues at Quindell Portfolio

You couldn’t write a better story than the goings on at Quindell. One controversial piece of news after another!

The shares fell as low as 25p yesterday, almost a 50% drop, as the company announced ex-Chairman Rob Terry sold over 25 million shares, reducing his stake from 8.7% to below the reporting threshold of 3%. Below 3% the company is not required to inform the market of further sales and therefore it is possible he has gone further. A block of over 20 million shares was placed on the market on Tuesday at 42p representing the bulk of Terry’s sale.

The shares bounced back slightly before the close of trading as Quindell issued a contract update RNS an hour or so after the Rob Terry share sale announcement confirming twitter rumours of an extension of a contract with Swinton Group,  Insurethebox who are the UK‘s largest provider of telematics insurance and a new multi year contract with one of the UK‘s leading motor-cycle insurers for its ICE Claims, and ICE Intelligence solutions. The shares finally closed down 26% at 33p accompanied by huge trading volumes, quite a day! Today the shares have rebounded 14% to 37.5p as the overhang from the Terry share sales has cleared and there is at least some relief that Swinton have contractually renewed in the face of all the controversy.

It seems a strange decision for Terry to dump his shares when he believed that the company was “materially undervalued” in November. Most likely that Terry is washing his hands of the company he founded after his forced ejection to allow him to move onto his next thing or to retire to the Carribean. But in the meantime his actions over recent weeks including the deal with Equity First Holdings has left a very bitter taste in the mouth for investors after all his recent statements. He has certainly profited by many million pounds, but the only consolation is that if he sold early this year his stake would have been worth in the hundreds of millions.

As I wrote earlier in the week, the exit of Terry as Chairman, appointment of PwC to check accounting procedures  allows the new interim Chairman David Currie to draw a line under all the controversy and the latest revelations don’t help matters. It could be argued that if Terry was still holding nearly a tenth of the shares it would be difficult for the company to move on. So a small silver lining on the dramatic share sales news is that Terry’s influence on what the company does next has been significantly reduced – will he be fired from his role as consultant?

From a corporate governance and legal perspective Rob Terry has certainly sailed close to the wind to cash out his holding and it will be interesting to see if the regulatory authorities take any action against him. Many shareholders are quite rightly feeling pretty angry about recent events. Rumours are swirling that the company will announce a new Chairman next week (from the same source that correctly predicted the Swinton deal). Lets see if this battered ship can be finally turned around under new leadership and hopefully some more good news about contract wins is forthcoming. In the meantime the huge uncertainty about the company’s future continues and investors await the results of the PwC investigation. Things have got very messy after the share sale news as the share price sits at multi-year lows. I thought that 50p might be the floor a few days ago after the trading update, but apparently not. Quindell is certainly not for the faint hearted!

Contrarian Investor UK

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