ShareProphets

The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares


Join ShareProphets at less than 2p per article

> All the big AIM fraud exposés

> 300 articles and podcasts a month

> Hot share tips

> Original investigations by our experienced team

> No ads, no click-bait, no auto-play videos

Find out more

Quindell: What Does History Show Us?

By Lucian Miers | Friday 9 May 2014


Disclosure: The author has a short position in one or more of the shares mentioned. 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.


I read somewhere recently that one should only invest in companies where it is possible to explain what they do to a six year old. This is perhaps a little unfair in the age of fast evolving technology where often the business model, let alone the product, of highly successful companies can be pretty difficult for even brainy adult analysts to get their heads around.  

In the case of Quindell (QPP) it all ought to be fairly straight forward. It operates as a kind of back office to the auto insurance industry and get a little cut of every pound that you and I pay out in premiums. 

Fairly straight forward right?  Except that it seems to have found a way of doing it miles better and more efficiently than anyone else in a crowded and mature industry. It has also found a way of explaining how it does it in a language that is not quite English and not quite comprehensible despite containing many impressive words and phrases. 

It may be that Quindell, for a whole host of reasons, is managing to buck the trend in the mundane field in which it operates: boldness, economies of scale, energy, technological know how etc and simply has an unfortunate inability to explain or to appoint advisors capable of explaining in plain English how it is that they are so smart. 

Investors with memories should scroll back a few years and remember what was being said and written about the Innovation Group, the last plaything of Quindell’s Rob Terry. They should look at what happened there and why.  

They might also look at what invariably happens to businesses that seem to effortlessly to trump rivals in mature and established industries.  From the eighties I can think of Spring Ram (kitchens) Polly Peck (fruit transportation) Independent Insurance (insurance) Ashstead (plant hire) Jarvis (Business Services) Serco (ditto).  With Quindell maybe it’s different this time…

To read Lucian's weekly column first you have to subscribe to the Nifty Fifty newsletter where it appears exclusively. The average gain on share tips on The Nifty Fifty newsletter produced by Tom Winnifrith & Steve Moore is more than 20% per tip ( on an offer to bid basis) with an average holding period of 10 months. Tom & Steve are now working hard on their next hot tip out on Monday 12th. To sign up for that tip click HERE



Never miss a story.




This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.


More on QPP


Comments

11 comments

  1. Well even if it does go tits up eventually, my aim is to make a bundle trading it before then . Certainly not one to put your life savings in like lloyds bank ( ahem ) (bastards)

  2. Ps
    Its bottomed and on the way back up ………. close your short !

  3. Lucian,

    Thanks for writing such an insightful article. You make a good case for looking at a business against its peers, asking yourself how it’s possible for them to trump their peers, and if they’re not doing anything that different from others in the market then it’s probably a case of “if it’s too good to be true…”

    As someone in Insurance myself I knew of the Independent (mostly due to the fact my mentor used to be an underwriter there, and was then lucky enough to fall out with the CEO and leave shortly before the house of cards came tumbling down), but as a young lad I didn’t know of those other examples so thanks for those. In a spare moment I may have to do a bit of google search on those.

    Thanks,

    Libero

  4. QPP strategy director bought £100,000 of QPP shares yesterday ( see RNS )
    Someone is confident that the bottom was reached.

  5. A blip to what he holds overall. Still too many uncertainties to commit funds atm imo. Tom’s got a 0p target price on this… does that mean another Poly Peck or whatever…?

  6. Guess he’s in line for a £150k pay rise then ;)

  7. What history shows us is that a year ago, the share were 7p, and you were posting that the business was a fraud, the shares a screaming sell, etc etc. That was very poor advice.

    I don’t find Quindell’s explanations of its business unreasonable or unrealistic. It does use a certain amount of industry jargon, but always in ways which are reasonable to someone who knows that jargon.

    Mr Terry does have some Pollyana-ish tendencies, and I don’t agree with every claim he makes. But even with a discount for that, the shares look cheap. And the assertion or innuendo that the business is a fraud looks as wrong and unfair now as it did a year ago.

  8. Guy old fruit.

    I have never written an article saying that QPP was a fraud. Not at 7p, 19p or 42p when no doubt you were also a bull.

    I await your apology…

    T


  9. Saint Allard

    Dear Tom,

    You do seem to intimate that investors in QPP are morons.

    Noting the success of Rivington Street Holdings, do you not think people serve a second chance?

  10. Saint

    I do not think QPP shareholders are morons. I think the sort of folk who post dog shit, stalk, send death threats and post patent nonsense anonymously are morons.

    Re RSH.

    See prior comment. I left 2 years ago. The new management said it was “turning RSH around”. Fine. It then went bust and the new management having rejected bids for assets that would have left RSH with net cash, then asset stripped.

    Who do you want me to give a 2nd chance to again?

    T

  11. Tom – I didn’t see any mention of you in Guy’s post so perhaps any apology should be from you to Guy for the misunderstanding – old fruit.


Enter your comment below. Fields marked * are required. You must preview your comment first before finally posting.


Site by Everywhen