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Hedge fund boss increases Asos stake

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California-based hedge fund Camelot Capital Partners snapped up more than 360,000 Asos shares this month in a pair of share dealings worth more than £1.25mn.

Camelot’s founder and chief executive, William Barker, has served as a non-executive director of the fast fashion group since September.

Prior to his formal appointment, Barker’s vehicle already owned around 14 per cent of Asos’s issued share capital. This month’s purchases take the fund’s holding closer to 15 per cent. Asos has been struggling to reduce both its debt burden and excess inventory in recent years and its share price has fallen by around 50 per cent over the past 12 months.

Founded by a then 24-year-old Barker in 2013, Camelot manages a Cayman Islands-domiciled “value oriented” hedge fund known as the Barker Partnership. Shortly after its incorporation, Barker told the IC that the fund would be “my 50-year investment vehicle”. 

According to information compiled by FactSet, Camelot initially took a 3 per cent position in Asos in early 2019. The fund’s single-largest holding is in US-based online used car dealer Carvana but it also owns more than 20 per cent of electrical goods retailer AO World and a 5 per cent stake in Asos’s major rival Boohoo. 

Barker’s recent share purchase is bound to be interpreted as a sign of his faith in Asos’s prospects of recovery. While that may seem like a distant prospect, there are signs things are moving in the right direction.

At the end of the first half, Asos had £593mn of unsold merchandise on its books, ahead of its full-year objective of £600mn. The company is also working to bring stock into the business on reduced lead times, thereby enabling smaller purchase orders. JJ

Warpaint chiefs make a pretty penny 

Warpaint London shares have almost doubled over the last year, with the cosmetics company’s growth underpinned by expansion among both existing and new clients. 

Record revenue and profit was posted in the year to December 31 on the back of further success with customers like Normal, Etos and Wibra in the EU and Tesco and Boots in the UK. Meanwhile, new products were launched at Superdrug, while Walmart put in a sizeable Christmas order. Total revenue was up 40 per cent to £89.6mn and statutory pre-tax profit soared 136 per cent to £18.1mn. 

The US is currently Warpaint’s smallest market, but the long-term opportunity could be significant. The company’s products were rolled out to almost 400 more CVS stores last year, and conversations are ongoing with Walmart about it stocking Warpaint’s all-year-round product. 

Analysts at Berenberg think that “the Walmart opportunity could open further doors as brand awareness expands and other retailers are incentivised to introduce Warpaint’s products”.  

In the aftermath of the latest results, Warpaint said last week that chief executive Sam Bazini and managing director Eoin Macleod would sell shares worth over £30mn to institutional investors to “increase the company’s free float and broaden its shareholder register”.

The pair sold a total of 7mn shares in the placing at 450p a share. This was 1mn more than originally planned, because of the strength of investor demand, and represents just over 9 per cent of the company. Bazini and Macleod now jointly own 41.3 per cent of the company’s shares. 

While the company’s growth outlook is attractive, the market seems to have priced this in given the current valuation. The shares trade at 20-times forward consensus earnings, making them more expensive than the five-year average of 17 times.

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