COMPANY COMMENT: New Group Five board must placate investors
Grim trading update and entirely new slate of nonexecutive directors worries investors
After mulling things over it seems investors are a little more concerned about what’s going on at Group Five. The share price slumped more than 6% on Tuesday after dropping 3.3% on Monday.
It’s impossible to know what is worrying investors more, the grim trading update, which revealed problems on many fronts, or the entirely new slate of nonexecutive directors.
Possibly it’s the combination of the two. Investors hate uncertainty and it looks as though there’s a lot of it at Group Five. Of course, there will be those who think this is just the right time to buy the shares, when it looks as though things can’t get worse. This would be those investors who are happy with the new board, which was put in place courtesy of Allan Gray’s newly discovered activism streak. It isn’t the first time a section 61 action has been launched against a large JSE listed firm. Foord Asset Management did the pioneering work back in 2014 when there was a break-out of hostilities following Ketso Gordhan’s controversial resignation from PPC. Foord didn’t have nearly as much success as Allan Gray, partly because it wasn’t in as strong a position as Allan Gray; it’s camp had only about 11% of PPC. Allan Gray has 25% of Group Five and appeared to have Coronation’s support. And the battle moved faster at Group Five. The new Group Five board is faced with a tough task a...
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