QPP released an RNS earlier stating that directors had used the EFH (Equity First Holdings) facility to purchase more shares. After an initial rally, the shares are down 1.0% to 118.75p.
A Shareprophets article (http://is.gd/6zmsL9) links to several articles, including the case of Segovia et al v Equities First Holdings. The usual MO (modus operandi) of EFH is to take the shares transferred to it by the borrowers and sell them on the market.
I haven’t seen the primary source, so I cannot verify it, but Quindell’s brokers and nominated advisors, Cenkos, has apparently stated that EFH cannot sell any stock unless the directors default, and that the directors have only transferred a percentage of their total assets as security. Cenkos reiterated their buy stance on QPP in mid-October. In a Citywire article in late April (http://is.gd/Wzc2b7), M&G Recovery fund manager Tom Dobell stated: “Dobell, who had 2.3% of the Recovery fund in Quindell last month, dismissed Gotham’s report as ‘a rather unpleasant anonymous bear raid’ based on ‘spurious information’, although he acknowledged that ‘some of it had some legitimacy’.”
I don’t care what anyone says: the directors have bought around £2m worth of shares recently, and still the price goes down. Clearly, something is not right.
EFH provide finance backed by an underlying security. The securities may be illiquid, and in fact they probably are, and the interest charge is only around 5%. On the face of it, this seems a highly improbable arrangement.
The fact that QPP’s directors chose to finance the share purchases via a company like EFH, rather than a more orthodox route, has raised many more questions than answers.
We must be in the endgame now. Dobell can’t be feeling too clever right now.
118.75p ASX 3510
Update 08-Nov-2014: I recently notice Quindell Echo, which is a blog that started in September 2014, whose stated purpose is
Like many I do not like to see other private investors sell their Quindell shares at a substantial loss. Publishing blogs that explain simply why I am a longterm investor I hope will contribute to others knowledge before they make any investment decisions.
It presents the bull case for Quindell. It rebuts many of the arguments I presented above.