The insurance claims outsourcer is back in the news today with the controversial company forced to rebuff market rumours that it is mulling the sale of its 25.3% stake in car repairs firm National Accident Repair Services (NARS:AIM). That stake is currently worth £7.7 million so not insignificant for a company whose cash generation has been the source of long-running speculation and scepticism.

The company 'confirms that, contrary to speculation, it is not actively seeking to sell its shares in Nationwide Accident Repair Services,' Quindell's (QPP:AIM) stand-in management said today. I say stand-in because nobody really knows who's running the show at present following Tuesday's (18 Nov) ousting of founder and chairman Rob Terry, plus two other directors. The axe fell after the trio were caught up in a controversial share trade with little known US financier Equity First Holdings, lending substantial numbers of shares in the company to raise cash to, apparently buy more.


(Quindell's controversial founder and now ousted chairman, Rob Terry)

In truth, this was the last of a catalogue of calamities to drag Quindell, and Terry's, name through the mud. In April there was the attack by mysterious US short trader Gotham City Research (GCR), whose claims were subsequently rubbished in court, the flopped premium listing main market switch, the unfortunate death of vice-chairman Tony Bowers. There there was the shock resignation of Canaccord Genuity, one of the firm's joint brokers, information that the company sat on for a month.

Quindell now faces, so reports say, a London Stock Exchange (LSE) investigation into whether holding back that Canaccord news broke LSE rules. Under rule 11 of the AIM code, a firm must immediately tell the market of any sensitive information that might move its share price, although it seems subjective whether a nomad's resignation might shift a share price.

The real questions facing investors seem to be threefold. First, is the business model capable of generating the positive cash flows previously promised. The recent trend appears positive, with Terry exclusively telling Shares in last month (23 Oct) that cash generation was well ahead of promises made.

‘We had £51 million, so £9 million ahead. We said would be at break even in the third quarter, we’re £9.4 million ahead, so far we’re £18.4 million ahead of guidance this year.’


Question two, is who's really running things. The announcement of Terry's departure from the board also stated that 'it is desirable to retain Mr Terry on a consultancy basis with particular focus on the group's key relationships and he will be available to assist the board, where appropriate, in executing its strategy.' Is that a coded message that Terry remains the key mover and shaker? Certainly as the company's biggest single shareholder with a near 47 million share stake worth more than 10% of Quindell's stock, it is not unreasonable for him to retain a say in future strategy regardless.

But the final question is perhaps most salient of all to existing and potential investors, what chance the share price staging a sustained recovery any time soon? With millions of pounds having been wiped off Quindell's market value this year, this is surely the $64,000 question.

Issue Date: 20 Nov 2014