Morebath mystery

The second part of this week’s Panorama investigation into the Woodford scandal focused on Capital Group fund manager Mark Denning and a fund that appears to have taken positions in some companies in which Capital was also an investor. Denning has left Capital, but has strenuously denied any wrong-doing.
The fund named by Panorama as being at the centre of the trades it questioned is Morebath. A quick trawl of filings shows that Morebath was indeed an investor alongside Capital in Aus-listed medical firm Mesoblast and Bollywood film producer Eros.
PIRC has also found that Morebath took some positions that were big enough to trigger regulatory announcements. These include three AIM-listed stocks: Cradle Arc, Lekoil and Phoenix Global Mining. These companies described themselves as a ’North American-focused base and precious metals exploration and development company’ (Phoenix); an ’oil and gas exploration and development company with a focus on West Africa’ (Lekoil); and an ’African focused base and precious metals exploration and production company’ (Cradle Arc).
In the case of Phoenix the fund (latterly renamed as IPF Investment Fund – Global Opportunities) increased its position to 6.87% as recently as April, according to filings. One analyst note we dug up from October 2018 lists Morebath as the largest external shareholder.
This doesn’t look like a fund hiding in the shadows; and to state the obvious, any decent IR person will know their major shareholders, and an investor holding a position that big clearly qualifies as a major shareholder. So it shouldn’t be too hard to establish what Phoenix knows about Morebath. Overall, it’s an odd little cluster of stocks that may reward further digging.
Still, if someone was looking to make a killing from these investments it hasn’t been plain sailing. Cradle Arc went into administration this January.

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