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Investment Trust Insider on Seneca Global Income & Growth

Investment Trust Insider on Seneca Global Income & Growth

James Carthew: this trust swerved Conviviality crash

The collapse of stock market darling, Conviviality (CVRC), has caught a few people by surprise. Quite a few UK small cap managers benefited from Conviviality’s rise. It came to the market in an initial public offering in 2013 at £1 a share and immediately started trading at a big premium. Its shares were trading in the 420’s back in November 2017 but they plunged to 101p on 14 March, when they were suspended from trading on the Alternative Investment Market.

Since then, Conviviality has fallen into administration and offloaded its off-licence chains and drinks distribution business, warning shareholders to expect no return. Those for whom it was a big position in their portfolio are going to be left with a bit of a headache; the morning after the night before!

In January 2018, the company announced half year pre-tax profits of £7.4 million. However, in early March, it came out with a warning that its forecast for underlying earnings for 2018 would have to be lowered from £70 million to £55 million. It also told the market that it had a tax bill of £30 million that it needed to pay by the end of the month. Clearly something had gone badly wrong. The company tried to raise £125 million from investors but this failed. Almost immediately, the administrators were called in.

Funds such as… read more here