3 weeks ago I wrote an article on shareworld about De La Rue. The share price had suffered due to some quality problems, and although I thought it looked cheap, I was looking for a better entry point than 700p - preferably 600p.
Today De La Rue announced an update on the quality problems. To me this looks like good news - the recognized financial impact so far has been a meagre £35m before tax (£25m after tax) vs a drop in market cap of almost £300m. Although the final bill will likely be higher, I find it hard to believe it will be more than 10 times higher.
The market disagreed, and at one point De La Rue had dropped almost 10% to 640p. I didn't manage to move quickly enough to get that price, but I was happy to buy in at 677p. De La Rue is now just over 4% of my portfolio.
In other news I see that my views on Connaught (that there was an 80% chance of them being worth nothing) seem to have come true. Today's announcement has put paid to any lingering hope that they might trade their way out of trouble.
What do you make of the bid approach from Oberthur?
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