I set what I thought was a very easy prize quiz on Friday offering to buy the winner lunch at Real Man. All you had to do was name company xxxx. You all said it was Quindell (QPP). And you were all wrong. Quindell shareholders you should be very frightened.
The task was to identify company xxxx based on two quotes. The first is how it described itself. The second was an analyst’s sell note. The quotes are:
“XXXX offers market-leading solutions for insurance companies, enabling substantial cost reduction through improved efficiency of claims processing. Integration of insurers' claims systems into the downstream supply chain increases control over the whole claims process, reducing 'claims leakage' where supply chain inefficiencies generate additional costs of 10-20%.”
“XXXX has been highly acquisitive, undertaking 16 acquisitions and investments over the past nine months. We believe that acquisitions were undertaken at premium prices, with an implied overall multiple of 6x sales. In at least three cases, it appears that companies involved in these deals have also been customers of XXXX. The potential, as with any acquisitive company, for financial performance to be temporarily decoupled from underlying trading concerns us.”
You all said Quindell. Not quite.
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