RE: Sp18 Dec 2020 16:31
this was posted by Paul Scott on 16/12/20 , looks like he was right ,so far
Capita (LON:CPI)
43p - mkt cap £720m
This complex, low margin outsourcing group briefly dipped into small cap territory in October, but along with many other bombed out shares, bounced strongly in November on positive vaccine news, in what fund manager Keith Ashworth-Lord recently described as a “dash for trash”!
I want to follow up on it, because I covered Capita’s Q3 trading update here on 10 Nov 2020, and was quite shocked at how weak its balance sheet is - one of the worst I’ve seen, with NTAV negative at £(1.6)bn. Therefore a large equity fundraising will be needed at some point - hence shareholders are hostages to that being done on reasonable terms. If it’s bungled, and results in large dilution, then that could damage existing shareholders. Why take that risk?