Financial Trading Blog
Stock of the day 10/03/2016 – Old Mutual PLC
After an RBC downgrade, and subsequent 11% plunge, capped off a dismal end to 2015 Old Mutual entered 2016 at £1.74 (compared to £1.91 a year earlier and £2.40 back in April), before tumbling all the way to a 3 and a half year low of £1.48 by the middle of January. Whilst slower than to recover than some of its peers, eventually the macro-rebound that began in the middle of February began to filter through to Old Mutual, and by the start of March it was back to £1.80.
(Source: IT-Finance.com 10/03/2016)
It was here where 2016 really got interesting for the Anglo-South African investment group. On the 7th March the stock jumped nearly 7.5% (with its intraday-high seeing the stock cross the £2 mark for the first time since early December) on reports that it was ‘considering all options’ following reports that CEO Bruce Hemphill’s strategic review could lead to £9 billion break-up. That de-merger up could include potential standalone status for South Africa’s Nedbank, whilst Cinven and Warbug Pincus reportedly already have a joint bid lined-up for Old Mutual Wealth.
Monday’s speculation will likely change investors’ approach to Old Mutual’s full year report at the end of the week. A strong set of third quarter results back in November, with record-high (and acquisition-boosted) sales, will have already set the bar high for Friday’s figures. However, investors will now be expecting a substantial update on any potential break-up, the absence of which could cause the company to fall from the 3 month highs it hit on Monday.
Old Mutual PLC sits at a current trading price of £1.91 (IT-Finance.com, 10/03/2016), with a consensus rating of ‘Hold’ and an average target of £2.05.
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