Quindell plc Post Consolidation

Good afternoon.


Today I want to briefly discuss a stock on AIM that's become very well known to investors in the AIM.


Quindell plc is a company that specialises in insurance outsourcing and the delivery of telematic insurance products. As many of you will know, the company was hit by a very defamatory article known as the "Gotham City Report", which caused a drop in the share price from 40p to 17p.


Regardless of the company having released a full counter report with proof of the company's prospects and earnings, the market has still been wary of Quindell recently. This will in no doubt be in part as a result of the poor press Quindell has received from journalists, who apparently do very little to actually research the truth before putting it in the next day's paper and the shorting parties themselves who will have certainly have put downwards pressure on the share price to satisfy their needs for profit.


Although this seems like a pretty dreary picture, everything looks set to turn around now that a 1:15 share consolidation has taken place and that the market has been made more aware of the improving cash and revenue position of the company.


The share consolidation will bring with it several advantages (after a few days to allow the price to settle down), not limited to the following:


- Smaller spreads.

- Reduced price volatility.

- Quindell becomes purchasable for more funds (many funds have rules against investing in penny shares).


Add to this the lasted figures the company have released and you get not only a very undervalued stock, but a company that looks set to regain momentum quickly and steadily:


- Run-rate revenue forecasts from the legal services team have jumped up to £900m per year in the second half of 2014 (an increase from £650m in the first half of 2014).

- Cash generation (something that bugged investors) is now at £500,000 per day, with forward predictions of £750,000 per day by the third quarter of 2014 and £1m per day by the year end.


For a company that's currently running on a PE ratio of 8 (as of today) and a forward PE ratio 4, it's no wonder that large funds like Fidelity have been buying up stock since the fall in the share price.


Good luck readers,


The Masked AIM Trader.