AEW UK REIT, JGGI Merger and ShareSoc’s investor Basics

Yesterday I watched a presentation by AEW UK REIT (AEWU) on the Investor Meet Company platform. This is a property investment trust which I hold but like many property companies the share price has done badly in recent weeks and it’s now on a discount to NAV of over 24%. The portfolio manager, Laura Elkin, explained that the company’s objective is to achieve a high income for investors through active management.

One of the main concerns of investors in such companies is that with interest rates rising, property investing may become less attractive as they typically have significant amounts of debt used to finance property purchases and may need to refinance their debt at more expensive levels. But AEWU have fixed their debt at 2.9% p.a. for the next 5 years and they have a high current cash holding. Their loan to NAV ratio is only 31%.

The current dividend yield is 8.7% although that is not covered by current earnings. This arises from some property disposals resulting in a high cash holding but they expect the dividend will soon be covered again.

There are apparently opportunities arising to buy properties at good prices and they are having conversations with open-ended property fund managers who are having to dispose of assets after falls in the property sector and pension funds having to realise cash.

Another question was whether their property leases were indexed linked. Generally not. Indexed linked leases often have a cap and collar which provides only limited protection and AEWU’s leases are generally fairly short term anyway so can often be relet at higher prices. But that does surely mean that if the economy grinds to a halt then vacancies might increase and pressure to reduce letting prices will rise.

One interesting comment was that the office market is being hit by the ESG agenda. Prices are being affected by the quality of the property in that regard and this is meaning some improvement of properties is required to make them more attractive before reletting.

This was a useful presentation and a recording is available. AEWU have a good long-term record but property trusts are currently out of favour. Taking a long-term view, commercial property is looking to me to be quite an attractive sector at current price levels and AEWU seems to be nimble enough to take advantage of opportunities.

There was news today of a proposed merger of JPMorgan Global Growth and Income (JGGI) trust with JPMorgan Elect (JPEI) trust. The latter is a rather peculiar investment trust with three classes of shares – Growth, Income and Cash. Holders of any of the latter can switch between the classes without incurring tax liabilities.

Total assets of Elect are relatively small at £341 million in comparison with JGGI’s £1446 million so it is certainly a rational move so far as Elect holders and the manager are concerned. Is there any benefit for JGGI holders? There is some minor advantage of a larger asset base reducing overall costs so I will probably vote in favour as a holder of JGGI.

Investing Basics: ShareSoc has launched a series of videos. See https://www.sharesoc.org/investor-academy/investing-basics/ . It’s a meritorious attempt to educate people on the basics of investment in an easy-to-use format and in a few short sessions. It may help some people although this may not be a good time to encourage people to take up stock market investment. The markets are volatile at present with poor returns in the short-term discouraging new investors.

But shares are beginning to look cheap particularly in the small cap sector and where can one get an income of 8.7% which is what AEWU is paying in dividends? No instant access bank or savings account is paying more than 2.5% while gilt yields are higher but still nowhere near 8.7%. There is a capital risk in investing in REITs but there is also in gilts. Corporate bonds may be another alternative to look at but information on those is quite limited.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Financial Stability It Ain’t

With the appointment of Jeremy Hunt as Chancellor, we have now had four different Chancellors in a matter of a few months. What will overseas investors who dominate the markets make of this?

It will surely not instil confidence in the stability of the UK and its financial management. Liz Truss has not helped by apparently backing tax cuts and then now back-tracking on those commitments. Corporation tax will now rise as originally planned making the UK a less attractive place to invest. The Truss “high growth” strategy is floundering.

The gilt market is gyrating as the Bank of England planned to halt further QE and then changed its mind to stabilise the market while the FCA has allowed pension funds to pursue risky investment strategies which led them into panic selling of property funds and other assets.

Let us hope Mr Hunt can halt this merry-go-round. But what future is there for Ms Truss as Prime Minister? Not a long one in my view. She has not demonstrated confident leadership and her public statements have been quite dire. In a few months I think she will be gone.

I have decided to join the Conservative Party so I might get some say in who will lead the Party in future. I have supported the Party in the past – for example I helped Boris Johnson become Mayor of London although that turned out to be a questionable decision after London became the cycling capital of the world and the road network was severely damaged. But I never joined as a Member.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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How to Protect Your Wealth When Wars Threaten

I mentioned in a previous blog post a book entitled “Wealth, War and Wisdom” by Barton Biggs which covers how the turning points of World War II intersected with market performance. I have now read it and I am surprised that this book is not better known. It’s a very good analysis of how the wars of the 20th century impacted stock markets and the wealth of individuals. It probably should be essential reading for residents of the Ukraine at this moment in time, but it’s worth everyone reading it.

Does the stock market predict wars and their impacts is one question he tackles. The answer is yes and more accurately than political commentators it seems in many cases.

Here are some tips from the book that might be helpful:

  • Stock markets recover when the news stops getting worse, and before good news appears.
  • Equity markets have been a good protection against loss of wealth even in countries that suffered defeats, particularly in the long-term. The economic recovery of Japan and Germany after the Second World War soon offset their losses during the war.
  • Bonds are a losing investment in real terms whether you are on the winning or losing side. Inflation erodes their value because Governments print money to finance wars.
  • Buying gold only works if you bury it in the back garden, as otherwise it’s likely to be confiscated.
  • Property, particularly farms you live on, or small businesses you operate, are good investments even in the worst times.

The author actually covers the history and battles of World War II in some depth and it’s a refreshing and well researched analysis even for someone like me who is old enough to have read about a lot about the era in the 1960s and since. It provides some wonderful anecdotes and facts about how those wars created suffering for many millions of people.

The book was published in 2007. The author, Barton Biggs, was born in the USA and was an investment manager and strategist for Morgan Stanley. He made his name by forecasting the dotcom boom and bust which he called “the biggest bubble in the history of the world”. There is a fuller biography on Wikipedia.

Altogether a very original book which I highly recommend.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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How the World Really Works – Book Review

It is important for investors, and indeed for everyone, to understand what factors are driving the world’s economies. This is particularly so when there are concerns about global warming and the alleged degradation of the environment as the world’s population continues to increase.

A good primer on this subject is a recently published book by Prof. Vaclav Smil entitled “How the World Really Works”. The author covers wide ranging topics from energy supply to food supply in a very analytic way based on established facts rather than polemics which he criticises as being far too common in the modern world.

His chapter on food production is particularly interesting and he shows how we now manage to feed 8 billion people reasonably well which would have been inconceivable 100 years ago. How do we do it? By using energy supplied mostly from fossil fuels to create fertilizers and by manufacturing farm machinery and road/rail/shipping transport to distribute the products efficiently. The author points out that if we reverted to solely “organic” farming methods we would be lucky to feed half the world’s population.

He covers the supply of key products such as steel, plastics and cement which are essential for our modern standard of living and how they are not only energy intensive in production but that there are few alternatives. He clearly supports the view that the climate is being affected by man’s activities but points out that the changing of energy production, food  production and the production of key products cannot be easily achieved. Certainly it will be difficult to achieve that in the timescales demanded by European politicians when the major carbon emitters of China, India, USA, and Russia are moving so slowly.

Meanwhile any forecasts of the use of oil declining or reserves running out should be treated with scepticism as the price of oil reaches a 7 year high of $95 per barrel. Perhaps investors in oil companies (I hold none) should not be too keen to exit the sector rapidly particularly as the book teaches you that forecasts of economic activity are notoriously difficult.

The author looks at the risks in the future for the world, many of which are uncertain. He mentions the risk of a big “Carrington event” – a geomagnetic storm occurring today would cause widespread electrical disruptions, blackouts, and damage due to extended outages of the electrical grid. If that is not enough to scare you he suggests that another pandemic similar to Covid-19 is very likely as such epidemics have happened about every 20 years in the past and might be more virulent in future. But planning for such events, which were historically well known, was minimal and continues to be so.

He does not propose solutions to global warming other than that we do have many tools to enable us to adapt and cope with the issue. For example, farming could be made more efficient and wasted food reduced. Electrification of vehicles might help in a minor way and he is particularly critical of the increase in the use of SUVs in the last 20 years which has been particularly damaging (I cannot but agree with him on that point). But this is not a book containing simple remedies to the world’s problems. It is more one that gives you an understanding of how we got to where we are now and where we might be going.

For example, the use of coal in energy generation can be much reduced, and oil/gas also to some extent. Nuclear fission is a good source of clean energy and fission is a possibility even if he was not aware of the latest announcements on the latter. But it is inconceivable that there will be short-term revolutions in energy supply.

Altogether the book is worth reading just to get an understanding of how the world currently works – as the book’s title suggests.

Incidentally some of the events covered in How the World Really Works are also discussed in my own recently published book entitled “A Journal of the Coronavirus Year” which covers not just the recent pandemic but the changes that have happened in the last 75 years of my lifetime. It’s now available from Amazon – see https://www.amazon.co.uk/Journal-Coronavirus-Year-2020-2021-Biographical/dp/0954539648/ for more information.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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It’s a Champagne Budget

It’s a champagne budget – or at least one to celebrate for investors as there are no really negative changes in it that were widely rumoured. At least that is apart from the rise in dividend taxes and freezing of allowances previously announced.

Here’s a list of the key points:

  • The National Living Wage is being increased.
  • The Government is substantially increasing funding for R&D.
  • The bank corporation tax surcharge is being reduced.
  • There will be some relief for business rates.
  • R&D tax relief will be focussed on domestic expenditure.
  • There will be more investment in tech skills and in schools.
  • Alcohol duties will be reformed and simplified with lower rates on lower alcohol products – champagne and beer will be cheaper.
  • Proposed rises in fuel duty are cancelled.
  • There will be minor changes to the taxation of REITs (details not yet clear but probably positive for investors) and there will be a levy on property developers to finance a fund to remove dangerous cladding.
  • The economy is now expected to grow by 6.5% this year (up from 4%) hence the generally positive tone of Rishi Sunak’s speech and new spending commitments.
  • Borrowing as a percentage of GDP is forecast to fall from 7.9% this year to 3.3% next, then 2.4%, 1.7%, 1.7% and 1.5% in the following years.

Comments:

This is generally a sensible budget with no abrupt changes in taxation, which are always to be deplored.

The emphasis on more education spending is surely wise, and on the NHS of course although whether the extra money will be wisely used remains to be seen.

Cancelling the rise in fuel duty may please some car drivers but it does not seem consistent with the aim to reduce carbon emissions and certainly will not help reduce congestion on our roads. Is this a two fingered gesture to Insulate Britain protestors who were active again this morning? But more prisons are being build to hold them if the courts put them away for a stretch.

It does not look like there will be any big impacts on particular sectors. The share prices of REITs have risen this afternoon so the changes may be positive but the rise in the National Living Wage will hit large employers such as retail store chains. There may be some benefits to large banks in the reduction in the bank surcharge on corporation tax but that will be offset by the general rise in corporation tax previously announced.

The changes in alcohol duties are a welcome simplification and may be of some benefit to pubs while encouraging healthier drinking. But it might negatively impact wine and spirits producers.

The UK stock market has not reacted significantly to these announcements although gilt prices rose on anticipated reductions in Government borrowing.   

More details are present in this document: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1028813/Budget_AB2021_Print.pdf

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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A Book to Cheer You Up

We are in one of those depressing moments of the manic-depressive cycles of the stock market. Invest-ability just told us that the FTSE 250 has now lost over 7 per cent this month and I can quite believe it with my portfolio certainly heading downhill. With the gloom of winter fast arriving, I can only recommend the book “Where are the customer’s yachts?” by Fred Schwed.

This book was first published in 1940 and the author had experienced Wall Street at its most extremes. He was a trader but lost a lot of his money in the crash of 1929. It’s a cynical look at the practices and people on Wall Street of which the author clearly had a fine understanding. One might conclude that the financial world has not changed much since.

It’s both witty and educational. As the introduction to the 2006 edition by Jason Sweig spells out: “The names and faces and machinery of Wall Street have changed completely from Schwed’s day, but the game remains the same. The Individual Investor is still situated at the very bottom of the food chain, a speck of plankton in a sea of predators”.

The title of the book refers to the apocryphal story of some out-of-town visitors to New York. On arriving at the Battery their guides indicated some handsome ships riding at anchor and said “Look those are the bankers’ and broker’s yachts”. “Where are the customer’s yachts?” asked the naïve visitor.

Here’s one educational paragraph from the book after he comments that “pitifully few financial experts have ever known for two years (much less fifteen) what was going to happen to any class of securities – and that the majority are usually spectacularly wrong in a much shorter time than that”:

“Still he is not a liar; nor is our other friend. I can explain it, because I have not only had lunch with economists, I have sometimes had dinner with psychiatrists. It seems that the immature mind has a regrettable tendency to believe, as actually true, that which it only hopes to be true. In this case the notion that the financial future is not predictable is just too unpleasant to be given any room at all in the Wall Streeter’s consciousness. But we expect a child to grow up in time and learn what is reality, as opposed to what are only his hopes. This however is asking too much of the romantic Wall Streeter – and they are all romantics, whether they be villains or philanthropists. Else they would never have chosen this business which is the business of dreams”.

On the subject of trusts he says “There has been a good deal of thoughtful, searching legislation enacted against trust abuses in recent years, and all of it favors the investor. The sad thing is that there can be no legislation against stupidity”. The recent events at Woodford come to mind.

The writer also comments on the detachment of the investor or speculator from the real businesses represented by pieces of paper – and “with these pieces of paper thrilling games can be played……this inability to grasp ultimate realities is the outstanding mental deficiency of the speculator, small as well as great”.

He points out that one of the agendas of the S.E.C. is to work towards the ideal of a completely informed investing public. A laudable effort he says but then points out that then “everybody would know whether to buy or sell, and whichever it was, everybody would try to do the same thing at once”. Orderly markets exist on differences of opinion. This view is worth pondering now that we have such instant dissemination of financial news and analysis on large cap stocks.

There is a much wisdom in this book which is both relatively short and readable. Highly recommended for those new to investment for the education and to experienced investors for the levity.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Mining Companies, Takeovers and a Journal of the Coronavirus Year

The usual stock market gyrations are taking place in August and this year it seems to be the turn of big mining stocks. Rio Tinto (RIO) is down 20% since its recent peak in May and Anglo American (AAL) fell sharply after it recently went ex-dividend. BHP Group (BHP) is also down but not by as much as might be expected after it announced that it was intending to unify its corporate structure and this will mean it will no longer be a FTSE-100 stock so some tracker funds will have to sell it. The downward move was probably limited because this company is dual listed in the UK and Australia and there was a discount in the UK versus the A$ price which will be eliminated.  

The reasons given in the media for declines in mining stocks are numerous – some profit taking after a long rise, worries about Covid infections rising, US stimulus measures being cut back, a slow-down in economic growth in China and several other reasons. All of this is probably just “noise” that can be discarded as financial news tends to be thin during the summer so media tend to invent stories.

As regards the BHP move, where I hold the stock, I do not oppose the simplification. It will still be listed in the UK but as a FTSE-250 stock. However the one-off costs of US$500 million to do the unification seems to be unreasonably high. I hope we see a good justification for the move when it comes to a vote. But it has been suggested that one motivation is a more relaxed corporate governance environment in Australia. As I have pointed out in previous blog posts, excessive regulation in the UK is providing an incentive to list elsewhere or not list at all.

Other market news is a recent spate of takeovers in my portfolio such as at Avast (AVST) and Ultra Electronics (ULE). The Avast proposal is not at a great premium but I have only held it for a short while so I will not oppose. It’s a good opportunity to simplify my portfolio which still has too many holdings in it.

As regards Ultra this is another short-term holding and the agreed offer price is at a very good premium so I will support. The Government has required the competition watchdog to assess ‘national security issues’ over the sale but the share price barely moved after that announcement so it seems the market expects this will not thwart the deal. With UK and US defence companies now so intertwined it would seem pointless to object.

On a more personal note, in March 2020 I started a diary because the coming year seemed likely to be a momentous one. With the Covid epidemic spiralling out of control and our departure from the EU (Brexit) having happened but no free trade agreement yet in place which was forecast to be a disaster by some people, it looked likely to be an interesting year economically and politically. And so it turned out to be.

My life in the period has been somewhat mundane as meetings have been cancelled and travel much restricted. But I thought it might of some interest to my offspring in due course. My father wrote a diary covering the years before, during and after the Second World War which proved to be fascinating reading when it came to light over 50 years later even though he was in a “reserved” occupation and the nearest he ever got to fighting was in the Home Guard.

I have now finished my diary as I consider the epidemic to be substantially over and Brexit has turned out to have minimal consequences on our daily lives. But some aspects of our lives have changed. My diary has been printed under the title “A Journal of the Coronavirus Year” and is comparable to “A Journal of the Plague Year” by Daniel Defoe published in 1722.

I have published other books in the past – the most recent one via Amazon which is relatively simple to do. But I only wanted a few hard copies for my family so I used a company called BookPrintingUK (https://www.bookprintinguk.com/ ). This I found to be a very good low-cost service which I can recommend it you have a similar need. It is easy to use and they can include colour photographs.  Photograph of completed volume of 400 pages is above.

The current book contains both personal information and commentary on the financial world – the latter often taken from my blog. Is it worth turning it into a publication that the general public, or at least the investment community, might find of interest? Let me know if you think that would attract any demand. As a history of the epidemic and other events from March 2020 to June 2021 and how life has changed in that period it may be of some interest to historians.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Only the Best Will Do

There was a good article in Investors Chronicle two weeks ago. It covered a book by Peter Seilern entitled “Only the Best Will Do”. This is one of the few books on investment I admit to not having read. But the IC review makes it look like the author has very much the same approach to investing as I have developed over many years (and is documented in my own book “Business Perspective Investing”).

Peter Seilern gives his ten commandants of quality growth investing as follows:

  • Scalable business model.
  • Superior industry growth.
  • Consistent industry leadership.
  • A sustainable competitive advantage.
  • Strong organic growth.
  • Wide geographic or customer diversification.
  • Low capital intensity and high return on capital.
  • A solid financial position.
  • Transparent accounts.
  • Exceptional management and corporate governance.

Finding companies that match all those criteria is not easy but when there are thousands of listed companies to select from why invest in lesser quality businesses?  You just have to make sure you don’t overpay for the good ones.

Note the lack of emphasis on buying cheap businesses, i.e. those on a low p/e or paying high dividends. It’s more important to pick quality businesses that will outperform in the long term.

Mr Seilern founded his own investment management company in 1973 which has had a good track record in terms of performance, so his book might be a good one for summer reading.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Why I Won’t Be Investing in Bitcoins

In the current market manias, investing in Bitcoins or other cryptocurrencies is a popular thing to do. Who could lose money on Bitcoins that seem to be on an unstoppable upward trajectory? Well a lot of people can. It was down 8% yesterday in sterling terms as I was writing this and it has been both very volatile and on a downtrend since the start of the year.

Apart from those folks who like to gamble on a throw of the dice or on the turn of a card, why would anyone “invest” in it? I suggest nobody because there is no fundamental value underlying the asset. That’s apart from the security issues and people just losing their passwords and hence being locked out of the asset.

If you buy shares in a company, you are actually purchasing part ownership of a business. That business will be producing something that people actually want, such as products or services they wish to consume. So long as people, or other businesses, have an urgent need for what a company produces then they will pay for it (typically by exchanging their labour or productive capacity (assets) using currency as a means of exchange). It is possible that Bitcoins might in future be that means of exchange but it is not ideally suited to that purpose.

The value of assets in the modern world is not identified by reference to gold or other physical assets and central Banks can print money whenever they wish. So there is no intrinsic value in cash holdings. The value is not limited by supply, and even with Bitcoins, more can be produced (albeit at enormous environmental cost because of the electricity consumed to do so).

When you buy a share in a company, you are purchasing a small part of a business that produces something useful. When you buy a Bitcoin all you are purchasing is a token to sell to someone else at a higher price – if you are lucky and can persuade them it has some value.

What’s the difference between Bitcoins and Gold you may ask? The majority of gold is not mined for just keeping in a bank vault or converting into coins. Some 50% is used in the production of jewelry and 37% in electronics. In other words, there are applications for it that are well established and consistent demand. Yes there is some speculation in gold and some uses of it as a simple store of value but the mining of gold would be sustained by industrial applications. You can actually wear gold jewelry to impress people with your wealth (just like people buy expensive cars and watches), but you cannot wear Bitcoins. All you can do is to go around boasting about how many you hold but that is not quite as effective as wearing gold.

The Financial Conduct Authority (FCA) has recently warned against speculation in cryptocurrencies by retail investors, and quite rightly. There is no intrinsic value in a Bitcoin. With company shares the intrinsic value may be somewhat uncertain and share prices subject to the emotions of investors but there is at least a way to determine the value by looking at the discounted cash flows generated by a company. The future cash flows help you to determine the current value. But with cryptocurrencies there are no associated cash flows. No dividends paid out and no profits generated directly from the assets as with company shares.

If you buy cryptocurrencies you are simply buying a “pig in a poke”.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Dividends Slashed, Investing for Income, NMC Health and Finablr

Many companies are announcing cancelled, reduced or postponed dividends – two of the latest were Shell (RDSB) and Sainsburys (SBRY). This will hit investors hard who rely on dividends for retirement income. But should they be doing so?

Terry Smith of Fundsmith had an article published in the Financial Times today under the headline “Investors: never let a crisis go to waste” in which he attacks income funds. In particular he questions whether the Investment Association should allow funds with “income” in their name to only have a yield greater than 90% of the average fund yield, i.e. less than the average! Even that requirement has now been suspended for 12 months. Terry calls this a “ridiculous piece of deception” and I can only agree.

If you invest in individual shares, there is a strong temptation in times of stock market crises to run for the hills and start buying what are viewed as defensive businesses with high dividend payouts. You argue that the dividend yield will keep the share price up even if all other news is bad. But this is a fallacy. All you do is put yourself at risk of a sharp decline in the share price when the dividend is chopped.

As Terry Smith also pointed out in his article, dividend cover in many companies that are on high yields are inadequate. In reality they are not maintaining the businesses, or certainly not growing it, by not investing enough of their profits back into the business. Sometimes it indicates that they are operating in a declining sector and many have an abysmal return on capital. Should you really be investing in such companies is the question you should ask yourself?

The simple rule should be: Never invest in a company solely for the dividend. Invest in it because it is a quality company with positive prospects and management dedicated its long-term future for the benefit of all stakeholders.

I have mentioned NMC Health (NMC) and Finablr (FIN) in previous blog posts along with many other frauds. It’s not that I am trying to put off people from investing in the stock market which is one of the main sources of what little wealth I have. Likewise when I criticise those who invest in income funds or high yielding shares. But my desire is to educate people about how to get positive rather than negative results. NMC and Finablr have both been chaired by Dr B.R.Shetty and he made a rather surprising comment in a letter which was published by Finablr yesterday. He said: “The preliminary findings provided by my advisors from my own investigations indicate that serious fraud and wrongdoing appears to have taken place at NMC, Finablr PLC (‘Finablr’), as well as within some of my private companies, and against me personally. This fraud also appears to have been undertaken by a small group of current and former executives at these companies”. He goes on at some length on how the frauds were committed. This all sounds rather unlikely but we will no doubt see in due course whether what he says is true.

The shares of both companies are currently suspended and NMC is already in administration. Finablr also had this to say: “The results of this exercise currently indicate that the total net indebtedness of the Finablr Group may be approximately $1,300 million (excluding any liabilities of the Travelex business). This is materially above the last reported figure for the Group’s indebtedness position as at 30 June 2019 and the levels of indebtedness previously disclosed to the Board. The Board cannot exclude the possibility that some of the proceeds of these borrowings may have been used for purposes outside of the Finablr Group”.

The outlook for shareholders in both companies looks very bleak indeed. Let us hope that the investigation of these frauds is quicker than it normally is, but I doubt it will be. The larger and more complex the company, and the bigger the fraud, the longer it takes regulatory authorities to pin the tail on the donkey. Think of Polly Peck for example.

As I said in my previous blog post that mentioned false accounting at Lookers, “Such events totally undermine investor confidence in the accounts of public companies and suggest much tougher action is required to ensure accounts reported by companies are accurate and not subject to fraud or misrepresentation”.

For investors the motto must be ““Let’s Be Careful Out There” (as said by the sergeant in Hill Street Blues) because the financial world is full of shysters. You need to research companies as much as possible before investing in them, but even that is not fraud-proof unfortunately. Only improved regulation and accounting can really solve the problem of corruption in the financial scene.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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