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“The markets continue to forge ahead despite a blowout jobs report from the US last Friday which seems to have finally put the nail in the coffin of the idea rates will be cut next month,” says AJ Bell Investment Director Russ Mould.
“The FTSE 100 clawed its way to its best levels in nearly a month with fairly broad-based strength throughout the index. There are just the first signs that we are inching away from a looking glass world where bad news is good news because of the implications for monetary policy to good news being good news once again.
“Banking group Lloyds was under pressure amid reports Iran used accounts at the bank to avoid international sanctions. For now, the damage to the share price is fairly modest but given the sensitivities around this area, particularly against the current febrile backdrop, there is a danger it could escalate into a larger issue.”
Vodafone
“In recent years Vodafone has been a business with all the alacrity of a beached whale and there’s nothing in its third quarter statement to get investors particularly excited.
“It is trying to shed some dead weight – with the company still in active discussions for its underperforming Italian business despite turning down a merger offer from rival Iliad last month.
“News of better-than-expected sales is something for shareholders to hang on to, with the company seeing improving momentum in its cloud and enterprise arms. However, management is not getting carried away as full-year forecasts remain unchanged.
“What will cause some concern for investors is the slowdown in the recent recovery in its German business – the largest contributor to the group.
“Vodafone could also be stymied in its ambitions to scale up its mobile operation in the UK as its deal with Three comes under the spotlight of the competition authorities.
“The UK’s CMA has proven itself to be robust of late and there is a risk the probe could either sink the deal entirely or introduce mitigations which will undermine its attractions. History does not provide an encouraging guide for Vodafone given the precedent of a tie-up between O2 and Three being turned down in 2016.”
Revolution Beauty / Boohoo
“Reaching a settlement with former chief executive Adam Minto should have been the last task in a cleaning-up exercise for Revolution Beauty. However, nothing is that straightforward when it comes to the makeup, skincare and hair products group.
“Minto has agreed to pay the group £2.9 million to settle allegations he breached his fiduciary duties to the retailer. Last December, Revolution Beauty agreed a settlement with former chair Tom Allsworth regarding various issues. Earlier in the year, it was involved in a battle with shareholder Boohoo over senior management, a fight which the latter subsequently won.
“With all these issues having now been resolved, Revolution Beauty should have been free to focus on growing the business, and an investor meeting to outline the strategy is scheduled for later this week. In theory, this could have also been the point at which Boohoo considers the company to be de-risked and therefore ripe for a takeover.
“Boohoo has built up a 27.13% stake since 2022, taking advantage of share price weakness in Revolution Beauty and seeing it as a way to strengthen an existing sales relationship. It wants to be a bigger player in the beauty market so there is logic to owning Revolution Beauty. It could save money over the long term by getting rid of Revolution Beauty’s stock market listing and running the two companies on one platform. Allsworth and Minto each own 15.35% of Revolution Beauty and might welcome a cash exit to help fund other ventures.
“The threat of potential legal action by Chrysalis Investments against Revolution Beauty throws a spanner in the works, with the former having bought £45 million worth of shares in 2021 and sold them a year later for £5.7 million.
“Chrysalis’ statement last week implies Revolution Beauty may have misled investors during the period it was a shareholder. While formal legal proceedings have not been initiated, the prospect of this happening would certainly stop Boohoo from wanting to make a takeover until the matter has gone away.”
These articles are for information purposes only and are not a personal recommendation or advice.