Indholdsfortegnelse for Issue 937 i MoneyWeek

Few analysts pay attention when a company releases a long-range forecast, says Germany’s Focus Money. When it comes to Bechtle, however, they make an exception. The IT services group, which offers more than 70,000 hardware and software products in areas including big data, cybersecurity and cloud computing, has a habit of meeting its long-term goals. It now says it wants to double sales to €10bn in the next 12 years (implying annual growth of 6.3% until 2030) and maintain its pre-tax profit margin of 5%. This seems plausible in view of the momentum provided by the structural growth in the key sectors it operates in. The stock is on a price-to-sales ratio of just 0.8.…

The news that Ray Kelvin will quit immediately as the CEO of Ted Baker has “ended three months of uncertainty”, says Matthew Vincent in the Financial Times. His exit follows allegations of inappropriate behaviour, including unwanted hugs, and harassment of staff. The growing scandal “appeared to have weighed heavily on investors’ minds”, as shown by a dramatic fall in the company’s share price last week, on the back of a minor one-off warning about costs. Investors certainly seemed relieved, with the shares surging 5% on news of the announcement. Chairman David Bernstein will also be leaving within the next 18 months. “Mr Kelvin cannot be the last Ted Baker director to go over this episode,” says Alistair Osborne in The Times. The scandal has “exposed a grubby culture and a…

Congressional investigations are “swirling around” President Trump at a time when Robert Mueller, the special counsel, is “believed to be ready to present the findings of his inquiry into possible Russian interference in the 2016 election”, says Ben Hoyle in The Times. On Monday, the congressional department in charge of impeachment, the House Judiciary Committee, made 81 document requests from people and organisations in Trump’s circle. Jerrold Nadler, who has chaired the Committee since the Democrats seized control of the lower chamber last November, has asked the FBI and the Justice Department to turn over information collected by Mueller and prosecutors in New York as “part of a probe into possible obstruction of justice, corruption and abuse of power” by Trump and his associates, adds The New York Times. In…

The talks between North Korea and the US that took place in Vietnam, aimed at getting the communist regime to give up its nuclear weapons, collapsed last week, reports The New York Times. North Korea rejected President Trump’s offer to “go big” and “trade all its nuclear weapons, material and facilities for an end to the American-led sanctions squeezing its economy”. For its part, the US rejected a counter-offer from North Korea to dismantle one part of its nuclear programme in exchange for an end to the “most damaging” sanctions. That may make it seem like the last two years of negotiations has been wasted, says Peter Hartcher in the Sydney Morning Herald, but Trump deserves credit for two things. Firstly, he has had the courage to admit that “all…

China has “stolen $2trn to $3trn in intellectual property” from America over the last decade, claims hedge-fund manager Kyle Bass. That needs to be addressed firmly in any trade deal if the US is to see any real benefit from the current talks, he says. “The US’s number-one asset... is our ingenuity... our ability to innovate,” Bass tells CNBC’s Brian Sullivan. “That’s our game and they’re stealing our game from us. It’s really important for this new agreement to be measurable and punishable.” Bass, a long-term China bear, is not keen to invest in Chinese stocks, despite recent gains. “Can the Chinese run up their stockmarket? Absolutely. Domestically, they control the price, they control the printing press, they control the police, they control the narrative,” he says. But “why would…

Rail commuters have endured a “year from hell” with the “shambolic” introduction of a new timetable and delays to vital upgrades to the network, says The Mail on Sunday. Nevertheless, 963 employees of Network Rail, which runs the rail infrastructure, were paid more than £100,000 in 2018, up from 882 the year before, according to data from a Freedom of Information request. Of those 882, 131 earned more than £150,000 last year, including salaries, bonuses, pension contributions, overtime and other allowances. Bonuses of more than £30,000 were handed to 61 employees, and two received six-figure bonuses. CEO Andrew Haines was the top earner with £588,000; chairman Peter Handy earns more than £375,000. “Pay is always a controversial subject for a public body, but we need to attract expertise from around…

iea.org Some critics of my new book, Socialism: The Failed Idea That Never Dies, take me to task for not mentioning Scandinavia, says Kristian Niemietz. Except of course I do. As I argue in the book, the Nordic economies are relatively liberal, relatively lightly regulated market economies with low levels of state intervention. At the same time, they have high taxes and generous welfare states. If a generous welfare state is your definition of socialism, however, you run into a problem. The Nordic countries’ welfare states only look so generous because of an accounting trick – they hand over bigger sums, but claw it back in tax. If you look at social expenditures net of taxes, then almost all the difference in size between the British and the Nordic welfare…

Listed life-sciences fund Syncona is set to make £254m after Swiss biotech company Biogen agreed to buy its third-largest holding, Nightstar Therapeutics, for a “knockout” £633m, says Gavin Lumsden on Citywire’s Investment Trust Insider. Shares in the eye-disease specialist floated on US technology exchange Nasdaq 16 months ago, and soared by 66% when news of the bid broke. Biogen’s offer of $25.5 per share represents a 70% premium to Nightstar’s recent share price, though it is below the $26.42 peak hit last September. Syncona, which owns a 38.8% stake in Nightstar, has achieved a 4.5-times return on its £56.4m investment in the company. Syncona will not return any of the money to shareholders, but will use it to make further investments in its portfolio of 13 holdings and pipeline of…

A plot of land with planning permission for a 68,000 sq ft mansion – which would be Britain’s largest new home – is up for sale, says Hattie Gladwell in Metro. If the new owners take advantage of the permission to build a country house in the style of the 18th-century architect Robert Adam, they could build an 80-room house with floor space equivalent to 60 average-sized family homes. The design features a master suite occupying the entire top floor, a ballroom, an underground car museum with space to house 50 cars, along with an indoor sports complex featuring a swimming pool, leisure room, prep kitchen and bowling alley. The mansion’s price is thought to be around £20m.…

• The number of villa fraud cases is on the rise, says Action Fraud, the national fraud reporting agency. The con involves people booking themselves a holiday at a luxury villa online and paying out thousands, only to find when they arrive at their destination that the villa doesn’t exist, and they’ve actually handed their money over to a scammer. In 2017 there were 1,632 cases of “villa fraud” reported to the police. Victims lost an average of £2,052. “The problem has ballooned in the last ten years, with scams becoming more and more sophisticated,” says The Guardian. The fake websites look authentic and the villa details are often stolen from genuine holiday listings. Tips to avoid being scammed include Googling the property to make sure it exists, avoiding payment…

Alternative finance isn’t quite as alternative as it used to be. Peer-to-peer (P2P) lending sites, along with direct lenders, have proliferated. In the UK, they have lent a total of £15bn over the last few years, according to independent industry research firm Brismo, and a great deal more in America and China. Investors have turned to lenders largely because of the promise of decent returns in a low interest-rate environment. “Orca’s IF Isa offers access to several lending platforms through one account” Most headline rates are more than 4%, while according to Brismo yields from lending on the big platforms have averaged around 7%. But that’s not a net figure, as you also have to factor back in losses from borrowers defaulting; that takes the net return back to around…

It has been a good fortnight for me. First, six of seven of my long positions increased in value. Greene King went from 625p to 662p, Cineworld climbed from 260p to 284p, John Laing Group went from 354p to 385p and JD Sports rose from 467p to 481p. Bellway increased from 2,812p to 3,056p. The only share that went down was Hays, which fell very slightly from 160p to 156p. Overall, five out of my seven positions are making money, with JD Sports and Greene King leading the pack at 810p and 812p respectively. Meanwhile, three out of my six short positions went down in price. Bitcoin declined from $3,807 to $3,722 and Twitter slipped from $31.23 to $30.50. After coming within pennies of breaching the stop-loss level of $53.50,…

For emerging and frontier markets 2018 was a year to forget. Investors were unnerved by trade barriers, a strengthening dollar, tighter monetary conditions and weaker commodity prices. However, emerging and frontier markets have now priced in a lot of bad news. Indeed, the valuation gap between emerging markets and developed markets is near an all-time high: the former’s price/earnings (p/e) ratio is 27% below the latter’s. Moreover, in the past two months confidence has returned. Oil prices and the US dollar have fallen, while monetary policy has become more accommodating and stimulus measures in China should bolster growth. This is an auspicious backdrop for the newly formed Mobius Investment Trust (LSE: MMIT). We aim to identify companies with resilient business models that are undervalued and mispriced. This involves an active…

Oprah Winfrey was nursing a $50m paper loss on her shares in Weight Watchers last week, says the Daily Mail. The US chat show host (pictured) owns 8% of the weight-loss brand, having sold a fifth of her initial 10% stake in March 2018. She may wish she hadn’t stopped there. Last Tuesday, CEO Mindy Grossman issued a profit warning and was forced to defend a decision to rebrand to “WW” less than six months ago. The aim is to try to leave behind associations with the outmoded concept of dieting, for a more holistic approach for the modern era. But subscribers, it seems, aren’t convinced – 600,000 left in the second half of last year. The share price fell by a third after the profit warning, and is down…

Despite fears over dwindling worldwide growth, global companies paid out more in dividends last year than any year on record, says Kate Beioley in the Financial Times: $1.37trn, a rise of 9.3% from last year, according to Janus Henderson’s latest dividend index. Canada enjoyed the fastest dividend growth among large developed economies with 11.8%, driven by oil companies and banks. Japan saw the second-fastest growth with 10.6%. US payouts climbed by 7.8%. In Britain, underlying dividend growth (discounting special payouts) was slightly ahead of the global average with 8.8%. Mining companies, banks, and British American Tobacco made the largest contribution to growth. Despite the recent global slowdown, payouts should keep climbing in 2019, reckons Janus Henderson. “Dividends tend to be more stable than profits because company managements store up cash…

“A rising tide lifts all boats,” says Tim Price in a Price Value Partners note. This chart is a stark illustration of the effect of a decade of rock-bottom interest rates and quantitative easing (money printing). The liquidity flood has ensured a 360% increase in the S&P Total Return index, which includes reinvested dividends. But an index constructed by Deutsche Bank, which tracks 1,000 top-quality global blue chips – chosen for their high scores in key metrics such as profitability – has climbed by just 8% in a decade. You would normally expect quality to be rewarded by the market, but in this era of central-bank activism, making the effort to find good stocks is “useless”. You might as well ”plop your money willy-nilly into cr*ppy stuff”.…

US ride-sharing app Lyft will soon become one of the first major tech names to list on Nasdaq this year. Its initial public offering (IPO) prospectus was released late last week. Lyft didn’t say how much it hopes to raise and the valuation it expects to achieve; in its latest private fundraising it attracted $600m and was valued at $14.5bn. Active users have increased sixfold since mid-2016, although rising costs meant it lost $911m on $2.1bn of sales last year. By the end of 2018, it had 39% of the US ride-sharing market, a gain of 17% in two years. Lyft will operate a dual-share structure, which will give its founders more control, and enable some of its 1.9 million drivers scoop up some shares too.…

Investors in Marks & Spencer (M&S) have been “positively falling over each other in the race for the exit”, says James Moore in The Independent. Just after a £750m joint venture with online retailer Ocado was announced last week – to be paid for by a “savage” cut to the dividend and a rights issue – the shares slumped by nearly 20%. But the move makes sense. It fills a glaring hole in the M&S armoury: the “lack of a food-delivery business”. It also makes its general merchandise available via the “successful” Ocado platform. Teaming up with Ocado “gives M&S access to a huge range of 50,000 individual lines and a much larger average basket size compared with its own”, says Jonathan Eley in the Financial Times. Still, it is…

Two week ago, I tipped that you bet on Labour winning the Newport West by-election, due on 4 April. I still think that this is a good bet, especially since you can now get slightly better odds of 1/6 (83%) on Labour winning with Ladbrokes – though, as usual, if you’ve already taken my advice, don’t bet any more money. Ladbrokes is also running an additional market on Labour’s share of the vote. Ladbrokes thinks that the most likely outcome is Labour getting between 40% and 50% of the vote, offering 5/4 (44.4%). The next most likely outcome is between 50% and 60% of the vote, with 7/4 (36%) available. It’s also offering 5/1 (16.7%) on Labour getting between 30% and 40%. Those who are very optimistic about Labour’s chances…

China is set to become an even more significant force in global equity markets. By November, index provider MSCI will have increased the proportion of domestically listed Chinese stocks (“A-shares”) in its emerging markets index from 0.71% to 3.3%, notes the Financial Times. As a result, any funds that track the popular benchmark will have to buy more of the shares. Chinese stocks listed offshore in the US or Hong Kong already account for 31% of the index, so by the end of the year China’s total weighting will be 34.3%. This is just one reason for this year’s China market rally (see page 4). “The return gap between these China trackers was huge” Yet for anyone considering investing in China, the latest Credit Suisse Global Investment Returns Yearbook (by…

It has been a bad few weeks for the kind of dinosaurs of business who thought bottom-pinching, hair flicking, and the kind of “suggestive” remarks that would have been a little out of place even in a 1970s sitcom were nothing more than harmless office banter. On Monday, Ray Kelvin, the founder and chief executive of the fashion chain Ted Baker, left the company amid an ongoing investigation into harassment in the workplace. Kelvin is accused of more than 50 incidents that included “forced hugging”, asking young female members of staff to sit on his lap, or massage his ears. Whether those claims are true remains to be seen. For now, it was enough to force Kelvin out. That comes just a few weeks after similar allegations were made against…

How to avoid the curse of oil wealth Jennapher Lunde Seefeldt The Conversation When ExxonMobil starts drilling for oil in Guyana next year, life there “may change dramatically”, says Jennapher Lunde Seefeldt. The “mega deal” is expected to increase Guyana’s gross domestic product from $3.4bn in 2016 to $13bn by 2025. Nearly 40% of Guyana’s 800,000 citizens live in poverty. This windfall has the potential to improve education, healthcare and infrastructure. However, there are also risks. A cautionary tale of the “resource curse” lies next door in oil-rich Venezuela. Guyana’s farmers worry that traditional industries will suffer government neglect and oil wealth often fuels political corruption. The Guyanese government already scores poorly on this front, making it vulnerable. It is also heavily indebted, so “overspending” could be tempting. Several domestic…

capx.co Since the 2008 financial crisis, the UK’s productivity has barely budged, says Jeremy Renwick. This will have obvious impacts on public services and living standards. The factors that might be thought to explain it – low investment, cheap labour, low interest rates keeping zombie companies alive, etc – are all true to some extent in the other G7 countries, none of which are suffering from stagnating productivity. A clue to the reason might be that the productivity gap does not apply to the manufacturing sector. Services businesses, which make up 79% of the UK economy, are all about the people. So perhaps the productivity puzzle is explained by lack of motivation. People are working longer and longer hours, in jobs that are increasingly insecure, for organisations focused solely on…

Former star fund manager Neil Woodford has stirred up controversy yet again this week, after his Woodford Equity Income fund swapped five of its unlisted stocks for shares in Woodford’s Patient Capital Investment Trust. On the one hand, the move makes sense. It was always odd to have an equity income fund investing some of its money into unquoted companies that pay no dividends. It also makes a lot more sense to hold these sorts of illiquid assets within an investment trust that specialises in early stage companies, than within an open-ended fund. The latter can run into problems with illiquid assets if too many investors want their money back at once, which is almost certainly another factor behind the move, as we’ll get to shortly. On the other hand,…

In just a few weeks, landlords could be sued by tenants for providing cold and mouldy homes. The law will only apply to new tenancies signed after 20 March, but existing tenancies will be covered by the act at a later date. The act makes it a requirement for all private landlords (or agents acting on their behalf) to ensure a property is “fit for human habitation” at the beginning of, and throughout, the tenancy. Under the new rules, a property can be deemed unfit for habitation if there is a “serious” problem with any of the following areas: repair, stability, damp, natural lighting, ventilation, water supply, drainage and sanitary services, and facilities for food preparation/cooking. If landlords fail to meet their obligations in these areas, tenants will be able…

For many people, the term “small-caps” conjures up images of dodgy penny shares hawked over the phone by people in boiler rooms. In truth, depending on the precise definition you use, the small-cap universe can include stocks with market capitalisations of up to £1bn, while even so-called “micro-caps” can be as large as £250m. The sector includes some of the most dynamic and fast-growing companies in the UK and around the world. If you’re prepared to do some basic research and be patient, they can prove very lucrative. Hidden gems There are two main reasons that it makes sense to eye up smaller companies. Firstly, unlike their larger counterparts, they are generally ignored by most financial professionals, with many fund managers barred outright from investing in them. As a result…

of the Bear: Lessons from Wall Street’s Four Great Bottoms (reissued by Harriman House in 2016), in which he provided a blow-by-blow analysis of how the bear markets ending in 1921, 1932, 1949 and 1982 played out. Since 2004 he has run a course for financial professionals – A Practical History of Financial Markets – at Edinburgh Business School. In 2014 he opened the Library of Mistakes, a library dedicated to financial disasters, in Edinburgh. Russell Napier is the co-founder of ERIC, an online platform for the sale of investment research (eri-c.com). He started his career as an investment manager at Baillie Gifford in Edinburgh in 1989 after studying law at Queen’s University, Belfast, and Magdalene College, Cambridge. In 1994 he moved to F&C Emerging Markets in London, then joined…

The government is pickpocketing the dead again. The cost of a death certificate has nearly trebled this month, rising from £4 to £11 per certificate. Though it doesn’t seem like much, families often need up to 20 certificates to prove death to different authorities, and would have to pay £200 rather than £80 for the privilege of proving a death has occurred. “This all adds to the cost of death and it prolongs the misery of people going through the most difficult times of their lives,” says Liberal Democrat leader Vince Cable in the Daily Mail. “There is no justification for almost tripling the costs of death certificates.”The increase comes just weeks after probate fees were put up, with some estates now having to pay almost £6,000 to get probate…

We don’t have the best record where Tesla is concerned. Twice this column has recommended that you short the electric-car company and twice the shares have risen. Last year, we were convinced investors were going to desert CE Elon Musk after his claims about taking Tesla private turned out to be hot air, prompting regulators to intervene. Instead, he went and pulled a rabbit out of the hat in the form of Tesla’s first quarterly profit since 2016. A crowded field Still, the fundamentals are unchanged: Tesla is overvalued as it is a barely profitable player in a sector facing intensifying competition. Indeed, almost every car company is now pouring large sums of money into electric vehicles (EVs), and models are starting to reach showrooms. Honda’s budget Urban EV is…

On the face of it, defence is not an attractive industry for investors today. Priorities are changing as perceived threats shift from conventional warfare to terrorism and cyberattacks, while the Ministry of Defence (MoD) strains to plug a widely reported “black hole” in its finances. Spending is tight and suppliers are having to invest in developing new products and services. Yet Cohort (LSE: CHRT), an agglomeration of defence technology businesses, has done its fair share of adjusting. SCS, the original business, floated on the stockmarket in 2006, aiming to acquire another firm every year. The directors, who had long records working for defence contractors, the MoD, or the military, would open doors for the newly acquired firms, who would also find it easier to win contracts as part of a…

Greggs (LSE: GRG), the bakery chain, has rapidly gained momentum over the past few weeks, with its controversial vegan sausage roll a key media talking point. It certainly seems to have boosted sales. The company boasted of “exceptional” performance since the start of the year, with same-store sales in the seven weeks to 16 February up by 9.6% compared with the same period last year, building on a “strong finish” to 2018. Management now expects full-year profits to be better than expected, which has sent the share price shooting up. It has gained 41% in a year.…

ZZZZ Best was a carpet-cleaning company set up in Inglewood, California in 1982 by the then 16-year-old Barry Minkow, while he was still in school. The company initially struggled for survival. Minkow (pictured) only survived by engaging in credit-card fraud, stealing money from relatives and staging burglaries in order to collect on the insurance. However, the company seemed to find a way to make large amounts of money when it branched out into carpet restoration for insurance firms. The apparent success of this business enabled ZZZZ Best to float in 1986, reaching a peak market capitalisation of $280m. How did it work? It didn’t – the restoration service was completely invented. Minkow created a fake firm, Interstate Appraisal Services, which posed as ZZZZ Best’s client. To keep the business running,…

Picture the scene – secret agent James Bond and arch enemy Le Chiffre, sitting opposite each other as the stakes raise ever higher in the memorable poker scene in Casino Royale. 007 carefully studies Le Chiffre’s face for signs of the “tell” that indicates he is bluffing. Or is he? I love this film and in particular those personal ticks that give away how others are truly feeling. I first tasted this wine in a lineup of bottles with Jim Eustace, managing director of wine emporium Haynes, Hanson & Clark. I never judge a wine by its label, preferring to zone in on the flavour. That way, I can be sure that it is the contents of the bottle that have stood up to my rigorous assessment rather than the…

Going… George Michael’s British contemporary art collection is heading to Christie’s in London for an evening sale on 14 March, and an online sale that runs until next Friday. Works by Damien Hirst, Tracey Emin, Jake and Dinos Chapman and Sarah Lucas feature in the main evening sale. Hirst’s The Incomplete Truth and Saint Sebastian, Exquisite Pain – a bullock peppered with arrows in formaldehyde – have been valued at up to £1.5m each. In 2006, Emin introduced George Michael to Michael Craig-Martin, an older artist and teacher often credited as the godfather of the YBAs (Young British Artists), says The Daily Telegraph. The two became close friends, and in 2008 the late singer bought Craig-Martin’s painting with the letters SEX emblazoned across it (pictured). It is expected to sell…

• Documentary filmmaker and Strictly Come Dancing winner Stacey Dooley has fallen foul of Labour MP David Lammy, says Jan Moir in the Daily Mail. From a Ugandan village, Dooley (pictured) posted on Instagram photos of her clutching a “cute black baby, who looks none too pleased with the encounter”. Lammy said it was an example of what he calls “white saviour complex”. To be fair, the images taken from where Dooley was reporting on neonatal clinics and malaria have a “queasy air” about them. “I’m sorry, but they do.” But when it comes to the wider implications of charitable donations from this country to Africa, Lammy “is way off beam”. Comic Relief has its faults, but it has raised more than a billion pounds through “ordinary British people of…

We have previously made two bold predictions. This week, we’ll make another. Our first was that the Federal Reserve would never normalise interest-rate policies. Our second was that Donald Trump would never follow through on his threat of a full trade war with China. The two are related. Fed policies and the fake money system behind them – not tariffs – caused the trade deficit with China. Prior to the introduction of fake money, not connected to gold, in 1971, the US ran a trade surplus, the biggest in the world. Now it runs the world’s biggest deficit. Why the difference? Because now it can simply print the money to pay its foreign creditors. “MMT is a substitute for common sense” This is where our third prediction comes in. On…

China’s main equity market index, the CSI 300, slumped by more than a quarter in 2018. But this year it has come roaring back, gaining 25% and outstripping its major rivals. Ongoing trade talks with the US, which have been “very productive”, according to Donald Trump, have been a key driver of the rally. And last week there was more good news for the bulls. Leading equity-index provider MSCI has announced that it is going to integrate more of China’s domestic stocks into its indices. Tracker funds following this index would automatically buy the new shares once they’re included in November. This could see $125bn flowing into the country’s equities this year. And in the long run, the so called A-shares could account for more than 16% of the MSCI…

“So far the government has been able to roll over only six out of 33 EU trade deals excluding the EU-Japan deal... Japan is stalling because it expects to secure better terms than it extracted from the EU. Meanwhile, the UK’s efforts to get agreement for its independent tariff schedules at the World Trade Organisation are being held up by 19 countries, including our allies Australia, New Zealand and Canada. They are unhappy with the agricultural quotas they have been offered... [yet Brexiteers said] we would have up to 40 deals ready to sign by the time we left. Britain will of course have more flexibility to strike deals... but we will no longer have the negotiating clout that comes with offering access to a market of 500 million people...…

Three to buy Ascential The Sunday Telegraph This business-to-business media group has changed beyond recognition in recent years thanks to frenetic deal-making. Gone are Health Service Journal and Nursing Times, to be replaced by digital tools that help brands monitor e-commerce data and marketing effectiveness. The “changing face of advertising” has left media investors hungry for services that promise to boost the top line, making Ascential worth “tucking away” for the long term. 362p Ashtead The Sunday Times These days people prefer to rent through the “sharing economy” rather than buy. What is true of Uber and Airbnb is also true of the construction industry. Enter Britain’s equipment-hire business Ashtead, which makes about 85% of its sales in the US. Fears of a slowdown have hit the shares, but Ashtead…

Maurice Tulloch, who was appointed Aviva’s CEO this week, has been tasked with “re-energising” the company, says Michael Bow in the Evening Standard. Thanks to a “string of mis-steps” by his predecessor Mark Wilson, including “controversial” plans to cancel special preference shares, the share price “has flatlined” in recent years. Tulloch’s “international background” could shift Aviva’s focus away from the low-growth UK life business towards “bigger-ticket” property insurance abroad. But income investors beware: Tulloch may well end the firm’s “generous” dividend policy by cutting the payout to fund more investment. Debenhams’s “rushed” announcement of another profit warning is “not that much of a surprise”, says Dominic O’Connell on the BBC, given the crisis that has engulfed the group. However, it is “also a coded admission that the company is looking…

When a country tries to keep its currency trading at a certain exchange rate, or within a tight range against another currency, this is known as a “currency peg”. In most cases, currencies are pegged to the US dollar. In the case of China, pegging its currency (the yuan, or renminbi) to the dollar worked out pretty well. In 1994, China fixed the yuan to the dollar at a rate of around 8.28 (representing a significant devaluation at the time). It remained around this level until 2005, when it moved to pegging the renminbi to a “basket of currencies” that included the euro and the yen. Within a few years, the renminbi had strengthened against the dollar somewhat, although the authorities continued to exert a tight grip. Maintaining the peg…

England rugby team captain Owen Farrell (pictured) and three other players at Saracens, his northwest London side, have gone into business with the club’s owner, Nigel Wray, possibly breaching the mandatory £7m salary cap, says the Daily Mail. Farrell, who earns an estimated £750,000, is also a joint shareholder in FAZ Investments Ltd, says the paper. Saracens said it had declared “all remuneration”, while the top-tier league, Premiership Rugby, said it would consider the evidence from the paper’s four-month investigation. The boss of mining giant Anglo American, Mark Cutifani, more than doubled his pay in 2018 to £14.5m, up from £7m the year before, thanks to £10.9m that came from a long-term incentive plan (LTIP) that vested with a rise in the share price. However, the maximum that executives could…

“When you’re an actor, wealth is about choice. I hate talking about class, but the truth is as an actor you’re only going to be doing some really great work if you can afford to be out of work and take the good stuff. If you can’t, you’re going to be treading quite a different path.” London-born actress Zawe Ashton (pictured), 34, quoted in The Observer “People sitting at the front are the fat cats. They’re not really interested… You know these people are there because they have money. The theatre has become a popular place for Instagram selfies — mostly it’s the girl who brings her boyfriend.” Ukrainian ballet dancer Oleg Ivenko on Russian audiences, quoted in The Times “I don’t know what else I’m suited to. I was…

inc.com If you have ever started your own company, sooner or later you will be asked whether you would ever do it again, says Thomas Goetz. If your firm is among the 25% of venture-backed start-ups that succeed, it’s an easy question to answer. But what about those firms that ran out of money, failed to find a market, sold at a loss, or came to some other disappointing end? All that sweating over investors saying no to another funding round, all that fretting over paying employees. Was it worth it? Well, my start-up, Iodine, did not transform healthcare as I had hoped. I spent nearly four years of my professional career on the effort and I sometimes wonder what else I might have done with those years. Yet the…

Hedge fund Barington Capital has built up a small stake in Victoria’s Secret owner L Brands, and is urging the company to consider splitting its “booming” Bath & Body Works division from the struggling lingerie chain, says Cara Lombardo in The Wall Street Journal. The activist investor has written to L Brands’s chief executive and chairman, Leslie Wexner, arguing that Victoria’s Secret could be “rejuvenated” by improving merchandise and updating its branding, and calling for board directors, including those with tenures of longer than 30 years, to be replaced. Wexner, who founded and has run L Brands for more than 50 years, controls roughly 17% of the shares. By contrast, Barington Capital owns under 1% of the company.…

A two-bedroomed period cottage with more than five acres of land running down to Loch Awe. The cottage has far-reaching views over the loch, which is a haven for fishermen, bird watchers and nature lovers. It was built in 1880, and in 1906 became it the first telephone exchange in the area. The cottage is now used as a holiday home and has a wood-burning stove in the living room. It is surrounded by mature woodland and bordered by a burn, and is within easy driving distance of Oban. But can you guess the asking price? Answer on the side of this box.…

Somero Enterprises (Aim: SOM), which provides concrete-levelling equipment to building companies, allowing high-quality concrete floors to be installed faster, flatter and with fewer workers, has been a very successful investment for Malborough Special Situations. Hargreave and Santa Barbara remain bullish thanks to the group’s patents and “commitment to innovation”. They also like the fact that, while the core market remains North America, “it’s steadily grown sales elsewhere”. Despite more than doubling sales over the last five years, the company trades at just 10.5 times 2020 earnings. Another smaller company worth investigating is Caretech Holdings (Aim: CTH). This provides specialist social-care services, supporting adults and children with a wide range of complex needs. Caretech was recently given the go-ahead by the Competition and Markets Authority to take over specialist residential schools…

It has been 12 months since retirement interest-only (RIO) mortgages went mainstream. These mortgages can be a good alternative to equity release for older borrowers, but they have previously received little publicity, with lenders slow to make products available. An RIO mortgage differs from a standard interest-only mortgage in that there isn’t a set end date for the loan. It only has to be repaid when you sell your property, die or go into long-term care. The affordability calculations also only look at whether you can afford to repay the interest on the loan, not the capital, as that will be paid back when the property is sold. “A £100,000 equity release loan at 5% interest soars to £211,370 after 15 years” Many people are not aware of RIO mortgages…

When it comes to picking a company that offers self-invested personal pensions (Sipps), it’s not quite as straightforward as choosing the one known to be the cheapest. Providers charge in several different ways. Moreover, the most cost-effective provider for you will largely depend on the size of your pension fund and how you want to invest it. Broadly speaking, Sipp charges during the accumulation phase (when you’re building up the fund) fall into three categories. You need to consider the administration charge that the provider charges for the plan itself; dealing fees incurred when you buy and sell various investments; and the charges on the underlying funds in your Sipp. Some providers have negotiated cheaper fees on underlying funds, although they don’t always pass these on in full. On smaller…

Despite their large salaries, chief executive officers (CEOs) in large listed companies have a surprising degree of job security. Stockbrokers AJ Bell found that while more than half the clubs in the top four English football divisions have replaced their managers over the past year, only ten FTSE 100 companies have seen their bosses depart. Boards tend to wield the axe if a company’s share price is doing badly. A 2008 study by Steven Kaplan and Bernadette Minton of CEO tenure found that between 1992 and 2005 the worse a company’s stock did relative to its competitors and the overall market, the more likely a CEO was to be ditched. Of course, the more interesting question for traders is: what happens after the person at the top is forced to…

Cohort has remained comfortably profitable despite changing defence priorities, but it reported a sharply lower order intake in the year to April 2018. The company was confident that orders had just been delayed and it would make good the deficit in the current financial year, but the size of the shortfall was unnerving. Delays can always get longer or worse, orders can fail to materialise. In November I attended a presentation by Simon Walther, Cohort’s financial director. With half the financial year gone, he reported good progress on five major prospective orders still outstanding, including new overseas orders and the renewal of an eight-year £50m contract to provide managed services to the MoD, which it has supplied continuously since 2000. All five orders have now been secured. The presentation I…

Countrywide (LSE: CWD) is the UK’s largest property services group, with businesses including surveying and estate-agency brands such as Bairstow Eves and Hamptons International. It employs around 10,000 people in more than 800 offices. The group has struggled as the property market has cooled off, issuing no fewer than four profit warnings last year. Core profits for the year to 31 December halved to just £33m, and management remains “cautious” about the outlook for 2019. In the past year, the share price has fallen by 78%.…

The first printed book to describe a stock exchange was sold in an online auction held by Sotheby’s shortly before Christmas, reports Bloomberg. Published in 1688, the aptly named Confusion of Confusions was written in Spanish by Joseph Penso de la Vega as a primer to the Amsterdam stock exchange, founded by the Dutch East India Company in 1602. Vega was a Sephardic Jew, who had immigrated from Spain to Amsterdam earlier in the century. In Confusions, Vega explains “puts” (rights to sell shares at a price), “calls” (rights to buy), liquidity pools, and manipulations, and how to invest. The main text is written as a series of dialogues between stock characters such as a philosopher, a merchant, and a shareholder. It is in the second dialogue that Vega sets…

€3 The tourist tax that day trippers to Venice will have to pay from May of this year. The cost will then rise to €10 per person from 2020. Those caught evading the fee, which is being levied to fund the cleaning of public areas and rubbish collections, will face a €450 fine. 10.8bn The profit in Danish kroner (£1.2bn) reported by Lego for 2018 – a turnaround from 2017, when the Danish family-owned toy company reported its first losses for 13 years, blaming a glut of stock in shops and warehouses. £46.50 How much Chris Henley, the chairman of the Criminal Bar Association, has said a typical barrister could expect to be paid for a full night of preparation and a day in court, working out to around £5…