Ennismore have increased their Quindell short position and on the 09/02/15 had a short position of 2.03%.
Whilst this is a concern for shareholders it should be noted that Ennismore have called it wrong in the past with regard to Quindell.
The Ennismore Fund’s NAV fell by 0.7% in January 2015. The largest negative attribution came from a short in Quindell, which cost the fund 1.1%.
In their update issued 10th February (see here) Ennismore pointed out the following.
“The share price increased strongly on the back of speculation that it may sell its legal services business. We do not expect them to receive significant proceeds from selling this or any other asset.”
Have Ennismore got it wrong again?
Ennismore increased their short position before the release of the Slater and Gordon trading update. The S&G update contained the following information about the possible Quindell deal.
1. S&G paid £12.1m cash for exclusivity.
See Slater and Gordon Financial report for half year ended 31st December 2014 Directors Report page 3 final paragraph.
“In December 2014 the company made a £12.1m payment to Quindell to enter into an exclusivity agreement…..” See website ASX.com.au.
2. The deal with Quindell is now in an advanced stage. Previously they had said deal was preliminary and incomplete.
Why would Slater and Gordon pay 4% of QPP’s current market cap for an exclusivity deal if they didn’t intend to make a significant bid for part of the business?
Why would Quindell enter into an exclusivity deal without knowing the ball park deal figures?
The fact the deal has reached an advanced stage indicates negotiations are progressing well.
Would Ennismore have increased their short position if they had been aware of the contents of S&G’s latest trading update?
We will know soon if Ennismore have made the correct call.