Quindell shares dropped by nearly 80% in 2014, while its shares jumped nearly 50% during the first seven days of 2015. Following today’s news, Quindell’s shares were as much as 15% in premarket trading.
Challenging 2014 for Quindell
Last year turned out to be disastrous for Quindell. In May, the insurance claims service provider was forced to clarify its use of a derivative to complete an acquisition, having initially incorrectly described the instrument to analysts. In April, U.S.-based Gotham City Research released a scathing report suggesting that the company’s reported profits are materially incorrect, its operations exaggerated, and its shares are worth no more than 3 p per share. However, the insurance provider has successfully sued for libel over the report.
Gotham City Research also charged that Robert Terry, one time CEO and company founder, was taking money out of the public firm through a variety of methods, including payments to related companies as well as paying his wife to work as “Finance Director” at the firm.
In October, the Insurance Times reported that several insurance companies featured on Quindell PLC’s website no longer work with the professional services company.
Last month, Quindell’s shares plummeted after disclosing that its founder and former chairman Robert Terry substantially trimmed his position in the company, forcing the stock to close at 34 pence, down by over 25%.
However, days before the founder’s stake sale, Quindell had called in accountants PwC to review its business after it became a magnet for short-selling hedge funds including Tiger Global, one of the world’s largest alternative investment managers.
Toscafund ups stake to over 5%
In today’s regulatory statement, it has been disclosed that the London-based hedge fund, Toscafund Asset Management bought stock in Quindell for its Tosca Mid Cap and Tosca Opportunity funds. It has recently bought another 1.9 million in the insurance outsourcer, taking its stake to over 5%. According to the regulatory news statement, the latest purchase occurred on January 2, the day Quindell confirmed that it was in talks to sell parts of the business to generate much-needed cash.
As reported by ValueWalk, last week Quindell, a UK-based insurance claims processing company, disclosed that it was in the early stage of negotiations with a number of parties said to be interested in potential transactions in connection with its operating businesses.