Slater & Gordon’s dramatic fall this year has cast a shadow over listed professional-service firms and created an opportunity for contrarians to pounce on undervalued stocks, such as Queensland-based law firm Shine Corporate.
A fall from glory
Slater & Gordon could seemingly do no wrong when it soared from $4.50 at the start of 2014 to a 52-week peak of $8.07 in April this year. The market applauded its acquisition of Quindell’s Professional Services Division (PSD) for $1.25 billion in March 2015 – a deal that would make it the United Kingdom’s largest personal-injury law firm.
Then hedge funds struck. They queried its audit relationship with Pitcher Partners and upped their bets against Slater & Gordon through short selling.