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“After last Friday’s stellar rally for UK-focused companies, the FTSE 250 takes a big step back at the start of the new trading week, down 1.1% to 19,820. The pound failed to sustain its rally and fell 0.55% against the US dollar to $1.2579,” says Russ Mould, Investment Director at AJ Bell.
“The big fallers among the UK mid-caps included Royal Mail, down 3.5% to 218.1p, one of the companies included in Labour’s renationalisation plans which would cost £196 billion in total, according to the Confederation of British Industry.
“The FTSE 100 slipped 0.4% to 7,218 with banks, housebuilders and supermarkets among the biggest fallers – having been among the biggest risers in last week’s stock market rally."
Sophos
“Another day, another takeover of a UK company by a foreign business as a US private equity firm makes a bid for FTSE 250 software firm Sophos.
“Sterling weakness has made pound-denominated assets look cheap and so we’ve seen many overseas firms pounce on UK assets in the past few years.
“Thoma Bravo’s bid for Sophos is fairly generous with a 37.1% premium to last Friday’s market closing price.
“The 583p take-out price is considerably ahead of the 225p price at which Sophos joined the market in 2015, meaning investors who bought at the IPO offer would have made 159% share price return in four years. That’s a stellar performance when you consider the historical returns from shares as an asset class have been approximately 7% a year.
“The downside of Sophos receiving a takeover bid is that the London market loses yet another tech stock.
“There are now slim pickings for UK investors wanting to invest in mid to large technology companies, meaning they have to look further afield for opportunities and be comfortable owning overseas-listed shares or, as an alternative, leave it to a fund manager to find suitable stocks.”
Superdry
“Sometimes it’s hard to let go. After returning in April as interim chief executive of the clothing chain he founded, Superdry’s Julian Dunkerton is now set to stay on until 2021.
“Given a significant emotional and financial stake in the business, it’s no surprise Dunkerton wanted to return to try and turn around a business which had badly lost its way in the wake of his initial departure back in early 2018.
“Whether the company’s problems were due to his exit or simply because shoppers had grown tired of the brand is open to question. It certainly seems like the decision to push the wholesale arm under the previous management was a mistake.
“This led to the company having a narrower range of items and, in order to keep things fresh, more seasonal changes were introduced.
“As a result, trading was more exposed to fluctuations in the weather and consumer demand, which in turn led to heavy discounting, ultimately undermining the integrity of the brand.
“Dunkerton certainly wasted no time in identifying the areas which needed work – namely getting back to a design-led approach, putting the right products in the right stores and improving the company’s online platform.
“And he swiftly hit the reset button on the financials, downgrading the earnings outlook, slashing the dividend and basically writing off the current year to April 2020 as one of transition.
“Despite some grumbles, shareholders largely seem willing to give Dunkerton time to get Superdry back on track. But his task won’t be made any easier by the tricky retail backdrop.”
These articles are for information purposes only and are not a personal recommendation or advice.