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A sudden fall of 16pc in any share price is certainly cause for alarm. This is what happened to ULS Technology, a holding in our Income Portfolio, over the course of Tuesday and Wednesday this week. What is going on with this stock?
At first sight the answer – and this may appear extraordinary to readers – appears to be precisely nothing.
As we have said before in connection with a previous fall in ULS’s share price, the first place we look when this kind of thing occurs is the stock’s page on the website of the London Stock Exchange, where “regulatory news service” (RNS) announcements published by the company will be found. But ULS issued none on the days in question.
This rules out the possibility that anything significant had occurred within the firm itself, as we can be sure that it would abide by the listing rules and report anything of note to shareholders.
A spokesman for ULS said the company was as mystified as anyone by the share price fall. Its stockbroker, Numis, was also unable to shed any light other than to speculate that selling by private investors had been enough to move the price of what is not a heavily traded stock.
But could developments outside the company have been to blame? ULS’s technology is used by participants in the housing market to facilitate property transactions so Questor looked at what had happened to other property-related stocks on Tuesday and Wednesday this week.
It turned out that shares in two listed estate agents, Foxtons and Countrywide, had also fallen, the former by 5.6pc over the two days and the latter by 11.4pc. Foxtons is the largest of the three businesses and ULS the smallest, so the differing degrees of share price decline in response to the same cause would be expected.
But what was that cause? The only thing Questor could find was a newspaper report on Tuesday morning that the Royal Institution of Chartered Surveyors intended to tighten the oversight of Britain’s 14,000 property valuers.
The focus of the institution’s initiative appeared to be the potential for conflicts of interest in the valuation of commercial property, whereas ULS’s customers are primarily concerned with the residential market. So, if the report was indeed behind the share price fall, the market reaction strikes us as extreme.
However, particularly where smaller companies are concerned – and the market value of ULS is only £33.7m – investors do on occasion sell first and ask questions later.
We think the revival of the housing market with the return of political stability is of far more significance to ULS than the possibility of changes to the governance of property valuation and we will hold on to the stock.
Questor says: hold
Ticker: ULS
Share price at close: 58p
Update: National Grid
On Jan 24, National Grid’s shares closed above £10 for the first time since June 2017. Their long period in the doldrums was largely down to the hostility of Labour under Jeremy Corbyn and his plans for renationalisation.
Thankfully Questor’s belief that the voters were too sensible to elect him was borne out by events.
Questor says: hold
Ticker: NG
Share price at close: £10.19⅖
Update: Royal Mail
Royal Mail is, mercifully, no longer part of this portfolio. Although we should have sold sooner, we can be glad that we didn’t delay any longer: shares in the 504-year-old company plunged to all-time lows last week after it warned that it could suffer a loss in Britain this year amid a threatened wave of strikes.
We sold at 217.7p and the shares are now 18.5pc lower at 177.4p. Royal Mail’s deep-seated problems with labour relations and restructuring remain and we will not be reinvesting.
Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.
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