Evil Knievil: Now it’s a gimme

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Evil Knievil: Now it’s a gimme
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I have received a few congratulatory messages pursuant to Watchstone’s (LON:WTG) rise two days ago. This is an agreeable response. However, it is misguided in that the rise was down to Lady Luck rather than the application of my logic.

Events have moved on in that the share price stands at 150p. This is flat wrong. Cash now exceeds 200p and the sale proceeds of operations should clear a further 25p cash. Further, there is the joker in the pack in that, as readers will recall, the High Court in London cleared WTG to bring a counter claim against Slater and Gordon for £63m. This claim against Slater and Gordon was dropped as part of the settlement announced on Monday. But it seems to me that there must be a good chance that WTG will now sue PwC for their conduct since, or so WTG allege, it was PwC’s conduct in acting as a “back channel” to Slater and Gordon that allowed the original £63m claim.

As to what this putative action will yield, I decline to guess. But I have made no allowance for it in my assessment of the cash in WTG. So the outcome is in for free.

Yesterday I bought a further 70,000 WTG at 150p since it seems to me to be a virtually free of risk trade. Indeed, it is a gimme.

It emerged late yesterday that the seller of stock on Monday last was Prudential. This underlines my view that one should never allow one’s money to be managed by these investment behemoths. I grant you that in the world of “new improved” Prudential the managers may prefer not to be involved in a company capitalised at c. £75m. But that surely does not mean that the baby should be chucked out with the bath water.

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