Jim Armitage: Game turns into a loser for Neil Woodford

 

Click to follow

Outlook Let me say this straight out: I’m a fan of Neil Woodford. His ability to beat the market (leaving aside the little matter of completely missing the 2003 banking sector rally) is matched by his preparedness to wear his tips as publicly as could be.

But this wouldn’t be a newspaper if it didn’t build folks up to dash them down. So I am duty bound to point out that Mr Woodford and his former employer Invesco have lost their shirts on their risky punts in Game Digital, the video-games chain whose shares plunged almost 50 per cent at one stage yesterday after its shoot-em-up profit warning the night before. Invesco and Woodford Investment Management are the second and fourth biggest investors in the company, with stakes of 13 per cent and 5 per cent respectively that they built up during last year.

It seems surprising to me that Mr Woodford should buy into such a stock, as he generally likes to hold on to companies for the long term. But surely there has to be a serious doubt that Game, with all that price competition from the supermarkets, Argos and Amazon, will even be around for the long term.

Meanwhile, Game’s biggest investor – Elliott Capital Management – lost a bigger shirt than anyone yesterday. But at least it managed to sell a further £3m of shares in the week, or weeks, before the warning. It was the latest in a series of sales since it floated Game last June. Shirtless, yes, but it saved its cufflinks.

Elliott – famed for its refusal to take a haircut on its Argentinian sovereign bonds – knows Game better than anyone, having bought the company from the administrators when it collapsed last time, in 2012. It even has a non-executive director on the board.

Selling those shares now looks very wise indeed. How Mr Woodford must wish he wasn’t among the folks who bought them.

Comments