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Thursday’s Disaster for Neil Woodford – would you Adam and Eve it?

By Tom Winnifrith, The Sheriff of AIM | Thursday 6 December 2018

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.

After spunking millions backing companies wanting to change the laws of physics or disrupt the markets for wooden pallets, washing machines and drinking water a chance to revolutionise the world of mattresses was just too good to pass up on for Neil Woodford. So he backed the May 2017 IPO of Eve Sleep (EVE) at 100p heavily and as the share price sank he added to his holding taking it to 29.05%. Neil always knows better than the market….

On 15 November the company ‘fessed that it had managed to spunk £9.7 million in the four and a half months from June 30 and that net cash was down to just £7 million. But fear not it said that it was going to raise £15 million and, with the shares at 17p, stated:

The Company has already received material levels of support for the planned fundraise from certain existing shareholders at a price that is significantly higher than the prevailing share price.

Fabbo. Er…..

Today we are told that the company now has commitments of just under £10 million at…. er ….10p.  Cripes, what happened to the “material” levels of support at higher than 17p. Who were they exactly and what has happened to them?

That just under £10 million comes from the chairman ( a Bernie), the CEO (£20,000 or less than a day’s cashburn), Channel 4 (£900,000) and of course Neil “nomates”Woodford who – subject to whitewash approval – will spunk another £8 million of other folks cash.

Of course the company still needs to find another £5 million or so and it does not seem that other institutions are rushing to follow Neil’s funds over the precipice with this one. The only good news is that the cashburn in the second half of November fell to just £500,000 in 15 days. Fabbo.  With no information on movements in trade receivables/payables that is a meaningless number.

The shares are now just 12.25p valuing Eve at £17 million so this is not yet in the 90% club but I bet it soon will be.

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