The £1.4bn Crux European Special Situations Fund, one of the most popular European-focused funds among Isa and pension savers, has been hit by the collapse in the share price of its biggest holding following a slew of allegations.
The fund is managed by veteran European stockpicker Richard Pease, who in several recent interviews cited the portfolio’s biggest holding, a German-based private equity company called Aurelius, as one his his “great successes”.
In December 2016 he told Telegraph Money: “Our best success is Aurelius, our biggest position. I like the fact that the founder and his family own a quarter of the business.”
But in late March the New York-based analysts Gotham City published a number of allegations about Aurelius, including a suggestion that executives had offloaded €169m worth of stock in December 2016.
Gotham, which has a history of publishing explosive and damaging research on specific stocks, also alleged that Aurelius’s holdings and their earnings were overstated. It estimated the value of underlying holdings at less than €9 per share.
Shares in Aurelius, which is listed in Frankfurt, peaked at €67 on March 24. Following publication of the Gotham City note they fell by 48pc to €35. They have recovered somewhat and currently trade at €47.50
Aurelius issued two lengthy rebuttals shortly after the publication of Gotham’s note and said it was “evaluating all avenues to pursue legal action”. It claimed Gotham’s research made “many fundamental intellectual mistakes” which led it to “reach conclusions which are invariably inaccurate”.
Mr Pease previously said he had paid €18 for the stock, so at today’s price longer-term investors in his portfolio have still made a handsome gain.