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By Tom Winnifrith | Monday 27 July 2015
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Last December I speculated that the biggest insurance partner of the fraud Quindell (QPP), Swinton, was set to cancel its arrangements. On 10th December newly appointed CEO Rob Fielding gave my critics much joy as he announced a new multiyear deal. Oh what a prat Winni is. The shares surged higher. Oh dear, the deal does not look to be multi-year at all unless 1+ 0 = 2 in the same way that 2+2 can = 5.
Slater & Gordon, which now owns Quenron’s legal services business, stated that it had terminated the contract with effect from 31 October 2015 and that this would not have a material impact on earnings. So this begs the question of what terms was Quindell offering to get the deal with Swinton in the first place.
The suspicion must be that Quindell was in fact making sod all from the deal but wanted a tie-up with a big name to boost the share price. That was needed to get away equity fund raise after equity fund raise to generate the cash needed to keep the fraud going. PWC has already stated that profits booked by Quindell were not real profits, the fact is that despite panama pumps and other frauds that did generate cash, Quindell PLC was a big cash consumer so needed equity placings to keep the show on the road.
The man who announced the Swinton renewal was Rob Fielding. Mr Fielding now – pro tem – heads up the Quenron business now owned by Slater & Gordon. But given his intimate involvement in various maters being investigated by the SFO and FCA, not least the £2 million bung he picked up when Quindell paid £30 million to buy a worthless business from convicted Nigerian fraudster Andrew O’Dua, one suspects he may be needing to consult head of HR Mrs Jill Harrison about career advice fairly soon.
As for S&G, its shares were A$7.95 post the Quenron deal. They are now A$3.47 and as this unravels and its woeful cash generation becomes apparent they will continue to tank. They remain one of my top 10 sells for summer – see HERE
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