Will Daniel Stewart Securities PLC Be The Next Quindell PLC?

Alan Oscroft — Wed, 01 Jul 2015 09:15:06 +0000

Those who’ve been following Rob Terry and his stock market ventures will probably be in one of two camps.

You’ll either think, after his Innovation Group failure, and after he was ousted from Quindell (LSE: QPP) at the peak of his optimistic claims (like when he was claiming to be buying shares but was actually selling, and the share price was plunging investors into serious losses), that he’s perhaps not in the same league as Warren Buffett as your guru of choice.

Or genius?

Or, judging by what’s been happening at Daniel Stewart (LSE: DAN) of late, you might think he’s a genius and that the golden touch has so far evaded him through no fault of his own. Daniel Stewart was Quindell’s nominated adviser on AIM up until early 2012, and in recent months Mr Terry has been building up a stake in the broker. After his ownership reached 9.9% earlier this year, he’ll now need FCA approval to take it above 10%, and that’s something he said he plans to do.

What is curious is Daniel Stewart’s recent equity issue and how well it did. After the news broke on 24 June that Quindell is under investigation by the FCA over public statements made during 2013 and 2014, Daniel Stewart shares crashed to a smidgen over 2p — even though it had no relationship with Quindell in the period under scrutiny.

Yet the very next day, the firm raised £1.2m in new cash at a price of 3.35p per share — and I’ve absolutely no idea how it pulled that off. Even as I write, the shares have still only recovered as far as 2.8p.

Best not ask just yet

Meanwhile, Mr Terry has said he will not seek FCA approval for the purchase of more Daniel Stewart stock until after the conclusion of its Quindell investigation (and I think that’s wise — I’m reminded of that old corner-shop sign that says “Please don’t ask for credit, as a smack in the mouth often offends“).

Should you join in and buy up Daniel Stewart shares now? Well, the company has recorded losses in the past two years and there are no forecasts out there — and its shares have been suspended twice already, once due to a capital shortfall, and once after it failed to file its accounts on time.

Which reminds me, Quindell has also failed to get its accounts out when it should and its shares have also been suspended — the firm’s need to rewrite everything in the wake of PwC’s investigation is proving a little time-consuming.

Riches for the picking?

There might be something worthwhile left in Quindell after its Professional Services Division was sold to Slater & Gordon, but the problem right now is we have no measures by which we can assess it.

So will this prove to be third time lucky for Rob Terry? Daniel Stewart and the rump Quindell could turn out to be crocks of gold. Or night soil. But right now, there’s simply no way to tell.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Will Quindell PLC Shareholders Benefit From Founder Rob Terry’s New Venture In Daniel Stewart Securities PLC?

G A Chester — Tue, 05 May 2015 07:41:14 +0000

Quindell (LSE: QPP) founder Rob Terry, who quit the company last November, has recently come back on to the radar of the investing community. And it could be good news or bad news for Quindell shareholders.

You may recall that Terry’s departure followed a precipitous fall in Quindell’s share price, amidst claims that his empire of “disruptive technology” was built on over-priced acquisitions and dirty accounting. There were also claims of insider dealing: Terry had been a seller of Quindell shares at a time when the company’s joint broker had resigned but the market had not been informed. Subsequently, Terry further sold down his shareholding, with many assuming he ultimately sold completely.

However, he’s back with an investment vehicle called Quob Park Estate, which describes itself as a “core shareholder” of Quindell. Quob Park Estate has also built a 9% stake in AIM microcap Daniel Stewart, the original advisor and broker to Quindell when Terry floated it on the stock market.

Quob Park Estate says it is “working with and investing in companies that are focused on the benefits of Digital Disruption”, and that “whilst remaining private equity focused, in the future we will open our doors to retail investors”. Terry recently told the Telegraph: “for that we will need to work with an FCA [Financial Conduct Authority] regulated firm, and I hope that that firm will be Daniel Stewart.”

It has also been announced that Terry intends to seek FCA approval to increase his interest in Daniel Stewart to above 10%. In the interview with the Telegraph, he said: “I’m absolutely positive that FCA approval will come through in the normal timescales”. If it does, Terry will, effectively, be cleared of the allegations of serious wrongdoing at Quindell (beyond the aggressive accounting the company has already held its hands up to) and the shares could rise. Conversely, a rejection by the FCA could hit the shares, as it might — unless explicitly stated that the rejection was solely on the grounds of insider dealing — imply a possible further can of worms at Quindell.

Quindell is set to complete the £637m sale of its large Professional Services Division to Australian firm Slater & Gordon, and anticipates returning up to £500m to shareholders. The sale will leave Quindell with a core of telematics-related businesses and a small ragbag of other businesses.

According to the Financial Times, Quindell has already rejected a £50-£60m offer for the telematics businesses from a connected-vehicle company owned by City financier Edmund Truell. Of all Quindell’s assets, telematics, which uses black boxes to monitor driver behaviour and broker car insurance, is the very essence of the “Digital Disruption” opportunities that Quob Park Estate is looking to focus its funds on.

Terry and Quob Park Estate already have around £50m of capital. By opening the doors to retail investors, and/or bringing on board third party co-investors, Terry could put himself in a position to make an offer for Quindell’s telematics businesses. Quindell’s shares could rise if Terry made a bid in excess of the rumoured £50-£60m Truell offer.

But Terry could go down another route with telematics, which could hurt Quindell. His venture before Quindell was Innovation Group. As with Quindell, he left Innovation under a cloud. When he set up Quindell, he promptly poached a number of Innovation’s key personnel and associates. If Terry set up a new telematics business, and poached Quindell personnel, he could undermine the value of Quindell’s business.

The reappearance of comeback king Terry, the news of his continuing interest in Quindell, the investment focus of Quob Park Estate and the stakebuilding in Daniel Stewart lead to some intriguing possibilities that could affect Quindell shareholders for better or worse. However things turn out, though, it’s clear that the founder and ex-boss hasn’t walked quietly away.

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