Star U.K. Stock Picker Dumps Whole Wirecard Holding

21 Jun 2020, 09:35 PM IST

(Bloomberg) -- Some of Wirecard AG’s most-loyal shareholders have sold their stakes as allegations of accounting impropriety engulf the German payments company.

Alexander Darwall, who has held Wirecard shares since at least 2007, instructed his investment firm to sell all of its holdings, while Alken Asset Management, which has owned the stock since 2008, did the same. DWS Group, which had built a Wirecard position that reached about 1 billion euros ($1.1 billion) across several funds by the end of October, has also cut its exposure.

Wirecard’s Chief Executive Officer Markus Braun resigned with immediate effect on Friday, after two Asian banks that were supposed to be holding 1.9 billion euros of missing cash denied any business relationship with the company.

Wirecard shares plunged as much as 52% in Frankfurt on Friday, and the stock has lost about 71% since Wednesday’s close.

Darwall’s asset management firm Devon Equity Management, which manages more than 1 billion pounds ($1.2 billion), has sold all of its Wirecard shares, the company’s biggest investment, according to a person familiar with the matter, who asked not to be identified because the holdings are private. Darwall bought the majority of his holdings in the firm in 2010 while he was still at Jupiter Fund Management Plc.

The German payments company represented just over 10% of assets in Darwall’s European Opportunities Trust Plc and 9.4% of the European Opportunities SICAV Fund as of the end of May, according to Devon’s website. Both positions were the biggest in the money pools and the trust’s holding represented almost 1% of all Wirecard shares outstanding, according to data compiled by Bloomberg.

Darwall built his reputation over almost a quarter century at Jupiter, where he at one time managed almost 8 billion pounds. Many of his vehicles were heavily invested in Wirecard, which had proven to be a profitable wager for the manager.

The manager engaged with Wirecard in March after an internal investigation at the firm and was satisfied the company would address the issues identified, Devon’s Chief Executive Officer Richard Pavry wrote in a letter to investors on Friday. “In retrospect this conclusion was a mistake, for which we apologise,” he wrote.

“When we ceased to believe in the investment case for the company on 18 June, we sold the position in its entirety,” Pavry wrote.

Alken, which had a 1.4% stake at the end of 2019, has also sold all its shares, according to CEO and founder Nicolas Walewski.

Deutsche Bank AG’s asset manager DWS will file a lawsuit against both Wirecard and Braun, a company spokesman said on Friday. The money manager said in a statement on Thursday that it no longer had material exposure to Wirecard in its actively managed funds.

BlackRock Inc. is the company’s second-largest shareholder, after Braun, and has more than 5% of Wirecard’s stock held across a number of funds as of June 8, according to data compiled by Bloomberg. A representative for the asset manager declined to comment.