Updates

Cape - Second largest contract goes awry

June 2012

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Early in the month, the shares fell through the 375p stoploss set last month. Following our meeting last month, it had started to look like Cape had run its course, particularly with the abrupt departure of the chief executive but we didn't expect things to worsen so quickly. Although we hadn't mentioned it last month, when we attended the FY11 results presentation, analysts were told about one disastrous oil rig contract where Cape had lost Â£4m due to cost overruns. Analysts heard that the problems had been resolved and operational management changes made. This month Cape said another contract had gone awry, unfortunately this one is its second largest, worth Â£37m and canâ€™t be brushed under the rug. The contract for insulation works ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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