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Funds hit as star stock Games Workshop bites back

Funds hit as star stock Games Workshop bites back
 

Shares in Games Workshop (GAW) have tumbled to the bottom of the FTSE 250 after the miniature war games maker issued a shortly-worded trading statement warning of 'uncertainties in the period ahead'.

The shares fell 8.7% to £30.40 and have now lost nearly a quarter of their value since peaking at the end of last month.

Sentiment has turned quickly on the shares, which even with the falls of the last few weeks is up 450% over the last two years.

In a brief statement, the company said that trading had 'continued well' since its September update, with sales ahead and profits in line with the same period last year. 

But it warned that there were 'some uncertainties in the trading periods ahead for the rest of the 2018/19 financial year'.

Russ Mould, investment director at AJ Bell, said the update delivered 'a reminder that no company is invincible'.

'A very shortly-worded update paints a dark picture for the future with talk of "uncertainties" despite saying trading has been good for the past few weeks,' he added.

'A lack of detail is surprising given Games Workshop has developed a reputation for being a very clear communicator in its results. The market rarely likes brevity and it hates uncertainty.'

Games Workshop has attracted a legion of fund manager backers, with the shares' strong run  helping them to race up the rankings of their top portfolio holdings.

A number of the top returning UK funds over the last three years owe their strong performance in part to their investment in Games Workshop, including Chelverton UK Equity Growth and Sanford DeLand UK Buffettology, the first and third best performers in the UK All Companies sector over the last three years.

Games Workshop was the top holding in the £478 million UK Buffettology fund at the end of September, representing 6.5% of the portfolio.

It had been the top stock in the £296 million Chelverton UK Equity Growth fund, but Citywire AAA-rated manager James Baker sold his shares last month, in what now looks a prescient move.

His colleagues on the £691 million Chelverton UK Equity Income fund, David Horner and David Taylor, meanwhile trimmed their position last month, as did Citywire AAA-rated Mark Niznik and William Tamworth, managers of the £500 million Artemis UK Smaller Companies fund.

Funds with large stakes in Games Workshop according to their latest factsheets include:

Fund Portfolio %
Sanford DeLand UK Buffettology 6.5
Ruffer UK Mid and Smaller Companies 5.1
Schroder UK Smaller Companies 3.8
Livingbridge UK Multi Cap Income 3.6
Sanford Deland Free Spirit 3.5
JPM UK Smaller Companies 2.9
Jupiter UK Smaller Companies 2.5
AXA Framlington UK Smaller Companies 2.3

While shares in Games Workshop were caught up in the wider market sell-off last month, investors also appear to have been unnerved by former chairman Tom Kirby's sale of £20 million of his shares at the end of last month.

But Peel Hunt analyst Charles Hall, who rates the shares a 'hold', upped his target price from £32.50 to £35 on today's news.

'This is an impressive performance given the tough comparison [to last year],' he said.

'The company has been active in scheduling releases to ensure continued momentum, which will result in a strong first-half sales performance.

'We now expect second-half sales to be ahead of last year, but profits to be lower due to the timing of cost increases.'

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