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“It’s rare these days to see Vodafone as the biggest riser on the FTSE 100 given its share price has been depressed for a long time amid market concerns about the sustainability of its dividend. “It bucks the trend on Tuesday to top the FTSE leader board on news it plans to raise circa €4 billion through issuing bonds. Vodafone’s share price strength helps lift the blue chip index because it is one of the FTSE’s biggest constituents. The market is also supported by strength in banks and miners,” says Russ Mould, investment director at AJ Bell.
GoCompare
“British entrepreneur Peter Wood is a man to watch when it comes to all things insurance. So when he declares that GoCompare is far too cheap and buys another big slug of the business, you know both industry professionals and investors are going to sit up and take notice.
“Wood founded Direct Line, Esure and Sheilas’ Wheels and was instrumental in the growth of GoCompare following its acquisition by Esure in 2014. His ownership of GoCompare has gone from 25.6% to 29.9%.
“The insurance comparison industry is incredibly competitive which drives players to go to extreme lengths to be noticed. The more bonkers the advert, the more likely it is to grab consumers’ attention, hence why you have an eclectic mix of meerkats, opera singers and robots.
“GoCompare’s shares have been weak for some time for a number of reasons. First there were rumours that Amazon was thinking about entering the market, causing investors to panic about the implications this would have on GoCompare’s earnings.
“Then falling motor premiums weakened the insurance market and GoCompare’s revenue growth ground to a halt.
“GoCompare is now betting on a new service called weflip to be a significant earnings driver in the future. This is a fully automated energy switching service.
“The fact that Wood has taken his stake to the highest possible level before having to make a full takeover offer, under listing rules, would suggest he is extremely bullish about GoCompare’s prospects.
“The next question will be whether he wants to take the business private so it can concentrate on the day job without the distractions of being a public company. One cannot rule it out.”
Debenhams
“The injection of a £40m lifeline deal with its lenders may be keeping the patient alive for now but the vital signs of department store Debenhams are looking increasingly weak.
“Having issued a trio of profit warnings in 2018 the company had reaffirmed guidance for the year to September as recently as January – however that guidance no longer stands. “On the plus side, the rate of sales decline in recent weeks has slowed a little and the company is in discussions with its creditors and landlords to come up with sustainable plan for the future funding of the business.
“However, the disruption from this process, combined with higher financing costs and an uncertain consumer backdrop provides the background for a new profit warning.
“Even if the company can emerge the other side of its balance sheet restructuring, there is a risk it will just end up running to stand still unless it can address the reasons behind its poor performance.
“This means boosting online sales, reducing the number of stores (something Debenhams has already pledged to do) and making sure it is relevant and attractive to discerning shoppers.
“In the interim, speculation is likely to mount over a potential approach from Mike Ashley’s Sports Direct given the logic of a possible combination with its recently acquired House of Fraser business.”
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