Remedies Are in Place at Earthport; Ask Andy
Byline: ANDY BROUGH FUND MANAGER AT SCHRODERS firstname.lastname@example.org
IT IS always good to look back at some of the shares I have discussed that have made money for readers. The takeover of Goldshield would be a good example. Unfortunately, being a fund manager is not all about a book of rising shares - there are always investments that do not measure up.
When things go awry a fund manager has two choices. One is to sell the shares, realise the loss and try and make it back elsewhere. This is fine if you own a small stake and so can trade in the market. But if a lot of investors try to sell at the same time, it can make such an exit difficult.
Or you can help in trying to sort out the problems, which Schroders tends to do as it often buys big stakes. An example of this is the disaster known as Earthport, which I suggested as a buy on thisismoney.co.uk, Financial Mail's sister website, last July when the shares were 681/2p.
Before Schroders invested in the firm, which provides an electronic payments transfer service, we met the management several times to ensure we were happy with the technology, the market opportunity and the ability of the company to execute its plans. So what went wrong? The management signed a number of contracts and announced these to try to keep up the shares. …