We won’t be buying or selling shares in Quindell (LSE: QPP) this morning. The firm requested that trading on AIM for its securities be temporarily suspended from 9:40am, pending an announcement and publication of a document.
Cancelled trades
Some share trades that went through between 9.40 am and 9.42 am were later cancelled and the counterparties notified, the London Stock Exchange said.
News reports have it that a mistake was discovered in the information Quindell released on Monday about a conditional sale and purchase agreement to dispose of its Professional Services Division — from where the company generates most of its profits.
According to the firm’s market update, Quindell plans to sell its Professional Services Division to Australian law firm Slater and Gordon Limited for an initial cash consideration of £637 million and further contingent cash consideration payable in respect of the future settlement of its clients’ noise induced hearing loss cases. You could’ve knocked many stunned investors over with a feather when that news came through — many thought the controversy-racked firm worthless!
Should we fret?
Temporary cancellation of trading is routine on the London stock exchanges. If ever there’s a chance of a false market developing because investors either are misinformed or underinformed, temporary cancellation can fix the problem until clarification. The scariest types of suspension occur when we await “clarification of a company’s financial position”, which often means a firm has gone bust and total investor wipeout tends to follow.
That doesn’t seem to be what’s happening with Quindell, though, although many thought it would at some point. Monday’s announcement told us that, as soon as practicable, Quindell would post a circular relating to the disposal and a notice convening a General Meeting of the Company to be held on 17 April 2015 to approve the disposal. That’s the type of announcement and publication of a document that we are awaiting before trading in the shares will recommence, I reckon.
Up and away
In the depths of Quindell’s public beating at the end of last year, when the shares plunged as low as 33p or so, investors taking a bullish stance on the firm’s prospects faced scorn and ridicule from many. Well, surprise surprise, the smart trade in December proved to be the’ long’ trade. At suspension, the shares froze at 140p today, which means those holding their noses and buying the lows show a quadrupling of their original stake.
So often, we find, in the world of share trading, the counter-intuitive moves prove to be the most profitable. It’s a perplexing outcome to many with Quindell, but given the recent history of the firm, I reckon we are in for plenty more twists and turns before the saga is over.