Invesco

Invesco

Invesco had amassed a 24% shareholding (567 million) in Yell by 19 January 2011, when the share price was around 14p. So, the value of their holding at that time was in the region of £80 million.

Apart from some periodic portfolio rebalancing, Invesco continued to hold those 567 million shares until 2 September 2012, when an article appeared in The Sunday Times, written by journalist Ben Marlow. 

Extract: "More than 400 banks and bond investors have started work on a contentious financial restructuring that will see a large chunk of the debts wiped out and the Lenders take over. Leading creditors — including Royal Bank of Scotland, Goldman Sachs and Deutsche Bank — are understood to be in talks to appoint Houlihan Lokey, the specialist American restructuring firm, to prepare a blueprint for a debt-for-equity swap. Shareholders are likely to be wiped out."

There was no response from Hibu, but over the next few days Invesco sold their entire 24% holding in the company.

Neil Woodford, the fund manager at Invesco at the time was one of the most successful fund managers in the UK. He managed a fund worth over £18 billion. However, more recent events in the news show that he was not the angel he purported to be!

Woodford had commented on 14 November 2011 - "Yell's new strategy offers real opportunity for value. Yell is building a unique position in the online market, with real potential for growth and cash generation."  Yet, less than a year later, Woodford sold his entire holding in hibu at a loss of at least £75 million, netting proceeds somewhere in the region of £5 million (or 1p per share).

Invesco’s action is puzzling. Hibu had issued an RNS on 31 August 2012 stating: 

“On 17 August 2012, hibu plc ("the Group") announced that it had approached its Lenders under its facilities agreement dated 30 November 2009 with a request to waive any possible event of default that may arise from certain repeating representations concerning the possibility of a future breach of the leverage covenant. The Group is pleased to announce that this waiver has now been obtained.” The share price had risen 20% on the day in response.

It sounded like good news, so something must have triggered Invesco to elect to sell 567 million shares immediately afterwards.

It is extremely unlikely that one of the UK’s most successful fund managers would dispose of their 24% share of a company based simply on a newspaper article. In retrospect, it is therefore clear to us that the journalist, Ben Marlow, must have found out exactly what was happening, as had Invesco, but that the company withheld this information from the public. The only response from their Investor Relations department of hibu had been “The company does not comment on press articles".

HSG think it is absolutely certain that Woodford and Invesco had been passed information that was not made available to ordinary retail investors. Also it is our belief that all institutional shareholders were passed this information to the exclusion of retail investors. It seem highly suspicious that all of the institutional shareholders exited their holdings BEFORE any public announcement was made, leaving retail investors with 100% losses.