No Abil winners as Coronation’s fear matched by Allan Gray’s greed
By Alec Hogg
As the story behind the Abil meltdown emerges, it's an unflattering tale for the country's two biggest investment houses. As David Shapiro mused in an insightful interview on Biznews last night, the reputational damage will be considerable.
It's now clear that Coronation, which owned just over 20% of Abil's total equity on Tuesday night, panicked after the bank released a trading update on Wednesday morning – disclosing its 23-year long CEO Leon Kirkinis was leaving with immediate effect. Coronation instructed stockbrokers to sell as many Abil shares as they could, driving a 60% collapse in the price. The selling wave continued the next day, dropping it another 81% from the newly depressed level. In three days turnover totalled 711m Abil shares, half the total in issue. Coronation offloaded 180m of the 300m shares it had owned on Tuesday night.
On the other side, hundreds of players saw Abil's plunging price as too good to miss. Coronation's fear was matched by the greed of willing buyers, among them the venerable Allan Gray – a house whose expensive marketing positions it itself as never distracted; a sensible, sober, long-term value investment firm. But this time Allan Gray tried to catch the falling knife. Yesterday it was forced to admit the error. There are so many lessons in this one barely knows where to start. Those in the Coronation and Allan Gray boardrooms may begin with some serious introspection.
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