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CITY WHISPERS: Number of city merchants training their weapons on Pennon, owner of South West Water, soars
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The number of city merchants training their weapons at Pennon, owner of South West Water, has skyrocketed.
Short positions – contracts that allow investors to make money when a stock price falls – taken against utility company FTSE250 rose to the highest level in more than five years in the past two weeks.
The number peaked at 4.4 percent of Pennon’s stock. But late last week, 3.3 percent was controlled by short traders.
Speculation: Short positions taken against South West Water owner Pennon have risen to the highest in more than five years in the past two weeks
The company hopes a trade update released on Friday — which said its first-half results would meet expectations — will calm the waters.
The market’s lukewarm reception (stocks were up 2.5 percent) suggests investors are pleased with how Pennon is grappling with challenges such as the driest weather in 100 years and population growth in the Southwest.
But there is speculation that it could be hit by higher energy prices, rising interest rates on its debt and an industry curtailment to prevent companies from discharging wastewater into rivers after it came under fire for dumping waste into waterways.
Tears at Boohoo
As for shorts, there may be tears at Boohoo this weekend after bets against the online retailer hit a new high of 10.4 percent share.
It’s quite an achievement – albeit an unfortunate one – to reach double digits. It follows a decline in both sales and profits.
Ten hedge funds, including City Whisper’s frequent flyer Marshall Wace, clearly expect worse to come.
M&C Saatchi investors look ahead
It was no surprise in the City when Vin Murria’s nine-month bid to buy M&C Saatchi flopped miserably on Friday.
Murria, who tried to buy the ad agency through her group – the oddly named AdvancedAdvT – was not getting enough support for her takeover.
Once that’s done, M&C Saatchi investors can decide whether to back an offer from their other lover, Next Fifteen Communications.
A vote is likely in November. But Next Fifteen’s lagging share price makes it unlikely that the deal (which involves cash and stocks) will succeed, according to a source close to M&C Saatchi.
Fifteen supporters may have hoped the company’s results last week would help matters, but the shares have lost even more momentum since then.
Cohort to be the last to have a nosebleed
Marks & Spencer, Whitbread, Amigo and Informa are among those to have nosebleeds this year from disgruntled shareholders due to high executive pay.
The latest to join the cohort nurses of an investor revolt is, well, Cohort, the AIM-listed defense and technology minnow who has contracts with the Department of Defense.
About 20 percent of the vote went against this year’s salary report, in which CEO Andrew Thomis was paid £340,000.
This was less than the £456,000 he made last year, when there was just 8 percent pushback.
The plot gets thicker…
Contributor: Amy-Jo Crowley