Buy the dip! (ROF is not authorised to give financial advice and the value of your investment may go down as well as up, in fact it's quite likely.)
Knights' share price plunged by more than 60% this week following an alarming trading update, weeks after the firm's Chief Financial Officer and General Counsel offloaded a substantial number of their shares.
The firm told the market in January that it anticipated "good trading in the second half" and was "confident in delivering a full year performance in line with market expectations".
However, on Tuesday the listed company delivered a trading update which warned that activity rates were "lower than management's expectations" and that "a continuation of the impact of Omicron" and "recent macro conditions" had "slowed growth to a greater extent than anticipated".
The firm blamed sickly employees for its stuttering performance, stating that "the persistent effects of Omicron across the country have meant, in particular, greater illness rates amongst our people, resulting in the business not benefitting from a faster return to office working and the consequent advantages of our team-based culture".
Knight said it had also seen a "softening in business confidence" but insisted, "The Group has not seen any significant losses of clients or fee earners".
The bad news sent its share price tumbling from 365p to 145p as investors digested the grim forecast and dumped their stock.
Don't worry, it's not a cliff, it's one side of a canyon.
Knights CEO David Beech became a multi-multi-multi-millionaire after the firm floated, and he still owns almost 20% of the issued share capital. His remaining stake was worth about £63 million, until Tuesday.
"Beech lost £30m in 7 minutes", gloated one of several Knights sources, adding, "Apart from Nick Leeson, not many will have lost that much that quickly". ROF asked Beech what the experience was like, but he declined to respond.
However, a couple of Knights' top brass had the good fortune to sell their shares in advance of the critical trading update. Chief Financial Officer Kate Lewis sold over 70% of her shares six weeks before the announcement.
With fortuitous timing, Lewis offloaded 180,000 of her 243,516 shares on 8 February at 375p, netting £675,000. According to the market notification which directors are obliged to make, the sale was "principally in order to fund the resulting tax and national insurance liability" arising from a share option she exercised. Three days later she sold another tranche for £40,000.
Knights' General Counsel and Company Secretary, Lisa Bridgwood, was even luckier. She disposed of 11,144 shares on 11 March, netting her £40,000 just 11 days before they halved in value. Neither of the officers were obliged to hold onto their shares in the period running up to the announcement, and there is no suggestion of wrongdoing.
The firm said, "As a listed business, Knights is required to announce without delay any material change in its financial performance compared to expectations, which it did on Tuesday, 22nd March, as soon as it became aware".
The biggest losers may be Knights' newest joiners. Langleys Solicitors is due to be swallowed up by the acquisition-hungry firm today. The initial purchase price was set £5.25m in cash and 704,515 shares in Knights, valued at the time at £2.75m. On Thursday they were worth £1m.
The firm told RollOnFriday that "recent increased absenteeism" had slowed its return to the office, which "is key to Knights’ culture". That must explain why Knights staff rated themselves the least satisfied in the UK with their firm's culture in the RollOnFriday Best Law Firms to Work At 2022, resulting in Golden Turd status.
In the survey staff complained about the firm's focus on shareholder expectations, and their concerns won't be assuaged by the chatter which followed the latest trading update. One investor who spent £30,000 'buying the dip' commented, "I would sort the feckers out in a week, everybody get your arses in the office and start doing some proper work and client interfacing as opposed to doing housework and long walks. There will be some s-hit flying about at the pointy end of the company that’s for sure. Fingers out and start fecking performing".
Comments
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The management have lost all credibility. Comedy Dave suggested we all need to work 30 minutes more a day to drag ourselves out of the shit.
The fact he put us into the shit seems to be lost on him.
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Coming soon to a mishcon near you...
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LOL! What an absolute sh*tshow!
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Do you think they’ll be trading next year?
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Such a shame for the former equity partners of all those Knights' legacy firms, whose sale consideration included a shed load of shares. I'm sure hearts are bleeding everywhere, especially amongst all the staff who were made redundant as a result of those acquisitions.
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1. Collect over-sized shiny offices at high rents.
2. Implement a crazy pricing regime following a game of golf with a pal from an international (not high street) law firm.
3. Create a shit culture so that people leave and nobody joins.
4. Refuse to accept responsibility and blame the staff for a profits warning even though other listed law firms appear to be thriving.
5. Gather the staff together and tell them that to fix the problem they need to come into the office and work 30 minutes more each day.
The profits warning is down to the business strategy put in place by the Knights management team. Trying to blame the staff is shameful.
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Do either Kate or Lisa have any tips for the 3.15 at Ripon a week next Thursday?
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Classic Knights throwing staff under a bus as usual! During the pandemic they were boasting about how well they had all worked from home!
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Why do I get this feeling that things aren't going to end well for Knights?
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It looks like quite a few from the Stoke region sold their shares just before the profit warning. The two mentioned are not the only ones.
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Oh dear. I think the END may be K-NIGH-ts!!!
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There is a reason people don't want to come into the office Dave, and it is not Omicron.
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Continued poor showing from a firm that refused to pay ‘high earning’ staff (those on £30k+ (LOL)) were hit with a wage cut during lockdown and making numerous junior members of staff redundant. Management is shocking.
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That investor at the end sounds like a real regular guy. I wish he was my boss, he seems to have the right ideas about how to get the best out of people!
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The quoted investor sounds delightful. Clearly has no idea about what solicitors do. It’s a phone and a laptop mate - where you plug them in is irrelevant
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I had a brief sojourn at Knights until I woke up and smelt the coffee. Every day now, I feel increasingly relieved that I left. Things just seem to be getting worse and worse.
65
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Lamenting at Langleys... Get out now!
64
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Bang out of order blaming staff sickness!
How about stepping away from the firm kool-aid and setting realistic market expectations. Another announcement like this will see the shares drop to pennies.
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@ the real reasons - sounds rather similar to another big'un that floated no so long ago.
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"Chief Financial Officer Kate Lewis sold over 70% of her shares six weeks before the announcement.
With fortuitous timing, Lewis offloaded 180,000 of her 243,516 shares on 8 February at 375p, netting £675,000. ...
Knights' General Counsel and Company Secretary, Lisa Bridgwood, was even luckier. She disposed of 11,144 shares on 11 March, netting her £40,000 just 11 days before they halved in value."
The great thing about diversity is that once you get more women in senior positions it's going to make a huge difference to the way business is done.
No more greedy short-sighted capitalism courtesy of the Old Boys Club!
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It’s a cult.
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Someone mentioned “working an extra 30 minutes a day” - I’m sure that’s more likely to be “record an extra 30 minutes of chargeable time a day”? Likely more a case of over inflated charge out rates causing staff not to charge all time incurred to clients due to fee pressures and retaining clients? A lot of people must have lost a lot of money and I’m a little shocked at how much the profit warning announcement (considering they’re still likely to report record turnover and profits) has affected the share price? Feels like investor confidence was already low and this announcement cemented that position!
”Buy the dip!” - not on your Nellie ;-)
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You don't become the new Shoosmiths by buying up conveyancing shops in Middlesbrough. Doomed to fail. On the plus side hopefully we don't have to see Beech's shit eating grin for much longer.
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For the equity partners of all those Knights' legacy firms, your 2 years is almost up. Enjoy the retirement and cash in your shares.
Greed what makes the world go around, kind of poetic justice.
F*** all.
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@woke 10.13
alas it’s only the two females who get named, as can be seen from the listings on LSE Sheridan (male director)offloaded nearly half a mill on 6th March @4.62 a share. Old boys club alive and kicking!
the saye scheme is like pyramid selling a house of cards…… feel very sorry for the staff stuck in this cult and of course the clients
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Mark Whitehouse and Andrew Pilkington sold shares too by the looks of it.
77
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Staff flocking to the exits across all offices, contrary to the comments of HRH Beech which maintains fee earner retention is good. Board selling shares en mass in the background whilst giving talks to Knights colleagues about investing in the SAYE scheme
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Non sexist bail out - that is true. DB did not seem happy when a question was raised on the call about the selling of shares some weeks ago. Denied all knowledge they knew there was going to be a profit warning.
Blaming staff for not being in the office but the three of them were on the call working from home. Lead by example eh
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well the shares have bounced today 10% (maybe having been written about here?) and revenue is on a healthy parabolic curve - although not reflected in earnings so perhaps the structural issue - or a sign of investing for growth. I'm not a shareholder, yet, but this could be a buying opportunity. Guessing the pundits here don't really know how markets work - best for us all to stick to to being lawyers probably.
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"I'm not a shareholder, yet, but this could be a buying opportunity."
Or it could be the other thing...
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I wonder if Lisa and Kate are going to put some money behind the bar for the paid staff party tonight. Doubt it.
64
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We were told that share saver scheme was a great opportunity and instead of a bonus scheme……
WELL
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@Anonymous 25 March 22 12:43,
Good of your to clarify this understanding of the word 'could'.
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"Good of your to clarify this understanding of the word 'could'." (all sic)
It's a very progressive and European use of the phrase, here on the mainland we use it as a form of words all the time when we get together in our fashionable espresso salons. In your primitive so-called 'English' language* the precise meaning is often better translated as "should be interpreted by all those who are not morons as".
Bonjour to you.
*really little more than a glorified dialect of German.
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The other highlights of the call were noticing the lack of a guitar on the wall of one of them and being told “not to believe the journalists or media”
Okay Dave
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Fewer people and clients = profit warning.
Who or what is the root cause of this phenomena?
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The Dark Night 14:12
You were told "not to believe the journalists or media” ..... are you sure you weren't on a call with Vladimir Putin??
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Never trust a ginner
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“The other highlights of the call were noticing the lack of a guitar on the wall of one of them and being told “not to believe the journalists or media”
rumours were rife that said guitars were sold to plug the £5m hole in the projected profits….
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What a grubby little outfit.
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From LSE
Knights is pleased to confirm that the acquisition of Langleys Solicitors LLP ("Langleys") has now completed, in line with the timeframe set out in the acquisition announcement of 31 January 2022.
Following the Group's recent share price movements, Knights has adjusted the terms of the acquisition of Langleys. The £2.75m that would have been issued in new ordinary shares in Knights, (the "Consideration Shares"), will instead be paid in cash in three equal instalments on 2nd January 2023, 2nd January 2024 and 2nd January 2025.
It seems the rouble may be more attractive than Knights shares right now. Bet the few remaining investors feel good about that.
54
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How can there be any more need for proof that allowing law firms to be subject to public investment is a bad idea?
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“Don’t believe the journalists or media”.
I think there is a significant trust issue around the Knights Board rather than the journalists or media.
That is why the share price slumped. Knights Board delivered only good news stories until shortly after its Directors sold their shares. It then delivered a totally unexpected profit warning which, based on the previous news stories, obliterated investor confidence. Many small investors work there which means Knights suffers a double whammy as it will be difficult to re-motivate people who have lost half of the value of their investments.
Even by Wild West AIM standards this was shocking.
Unless Knights swiftly refreshes and restructures its Board (as DWF did), it is difficult to see how shareholder (and employee) confidence will return any time soon.
I know whom I’d prefer to believe. It’s not Knights thoroughly discredited Board who claim to have been caught out by global issues which really ought not to be such a big deal for a regional player.
75
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The foolish decision to replace team leaders with largely jumped up and clueless client service directors hasn’t helped one jot. It is one of numerous stupid initiatives imposed to the detriment of the business.
Knights was a stronger and better business before the management team started messing around with the reporting and accountability structures.
Time to end the stupid experiments which have failed the business and its investors.
60
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Sounds like the shit show we’ve had at Slater and Gordon welcome to years of hell!
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Oh dear, so the top brass sold and the grunts got burned. That’s life suckers.
i doubt those that sold will give a rat’s ass about the bleating.
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This was always going to be the outcome. To paraphrase Princess Diana: ‘There are too many people in this marriage.’
A solicitor should be focussed on the client. Not the client, the share price, the City, the next interims and the next dividend.
You only have to look at what happened to those insolvency firms who previously floated, crashed and burned, to realise that this will likely end similarly...
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How on earth does the fall in Knights share price prove that allowing law firms to be the subject to public investment is a bad idea?
Are you an idiot?
60
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Great, thanks Knights management. I doubt anybody will stay for the 2 year recovery period comedy Dave talked about.
Maybe it’s time for you all to go.
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Shafted As You Earn
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Erm, the company is still making a decent amount of profit!
and as for the golden turd award let’s see the methodology, who and how many people did roll on Friday ask?
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Knights on Broadway 18:48
That information is classified. I will decline to comment.
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"How on earth does the fall in Knights share price prove that allowing law firms to be the subject to public investment is a bad idea?"
It's not just Knights - the share price of DWF and RBG hasn't grown since they initially listed.
Listing allows people who hold equity at the time of listing to enrich themselves, at the cost of preventing future generations from becoming full equity partners - and so disincentivising those future generations. You can see these problems showing in the share price of the listed firms.
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Fake news at 08.33 beautifully sums up the attitude of Knights tone deaf and delusional Board.
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Knights in white satin.
Swiftly reaching the end.
Letters I've written.
That I'm amazed clients will pay for given the general shoddiness of the work.
I love you. Oh I love you. Oh I love, youuuuuuu.
Etc etc.
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A toxic environment that engulfs you into a cult - a negative affect on team morale. Senior management just out for themselves. Family life suffers and not just mine. Not just Lisa and Kate who sold their shares, Andrew, Kate’s partner was fortuitous too, selling his at the same time. Loss of our earnings during Covid while others got pay increases!! Can’t blame Omicron DB! Golden turd for a reason! And you want us in the SAYE scheme… no thanks! I’m off!
53
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Jumped up today. It will be interesting to see whether Knights directors have bought a load of shares to restore investor confidence.
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7. Total positions of person(s) subject to the notification obligation
% of voting rights attached to shares (total of 8. A)
% of voting rights through financial instruments
(total of 8.B 1 + 8.B 2)
Total of both in % (8.A + 8.B)
Total number of voting rights of issuer
Resulting situation on the date on which threshold was crossed or reached
2.82%
0.03%
2.85%
84,505,230
Position of previous notification (if
applicable)
4.17%
0.04%
4.21%
Oh oh - check your investments kids, you could be part of this without even knowing.
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I have had a closer look at the comments section when Knights won the Golden Turd and I found this:
Results focused 25 January 22 07:42
Just taken a look at Knights recent results. Not very inspiring at all. The business model doesn’t seem to be working on any level.
Delivering bang average results whilst winning the golden turd suggests there are some deep rooted problems at this shop.
Maybe existing or future investors need to start taking their share tips from the comments section of RoF?
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Share price 28 March 22 20:58
Jumped up today. It will be interesting to see whether Knights directors have bought a load of shares to restore investor confidence.
or sold when high (before release of statement) making huge fortuitous financial gains then bought back when low?
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Don't mind me. I'm just popping in to make a cup of tea.
Talk about whatever it was you were chatting about before I walked in.
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Fake news 28 March 22 08:33
Erm, the company is still making a decent amount of profit!
and as for the golden turd award let’s see the methodology, who and how many people did roll on Friday ask?’
This has to be Beech typing the above!
48
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Amusing and entirely predictable.
Surround yourself with yes men and it all turns to shite.
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Anon 16:20
Well he did tell us not to believe the journalists, media or third parties
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Knights won’t struggle to buy law firms as there are always greedy owners who will sell their employees down the river.
Knights will continue to struggle to retain lawyers and their clients and lateral hire recruitment is pretty much finished because of the damage done by Knights “quirky” management team.
I struggle to see how the Knights share price might recover. Knights is facing some seriously strong headwinds and it’s difficult to see how the current management team might find a way overcome them.
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[email protected]
This has to be Beech typing the above!
what a load of tosh! There are plenty of staff who are perfectly happy at knights. And the point about the methodology is perfectly valid! As is the point about profit.
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There will be plenty more law firm acquistions save that the sellers won't touch any paper.