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Shares in Fisher Funds' Australian growth fund Barramundi have fallen to a low of 68c this week after one of its favoured investment stocks plummeted on the back of a second profit warning in three months.
Australian debt collection company Credit Corp has previously traded as high as A$10.75. But on Monday it fell 77 per cent in one day, dropping from A$3.08 to A91c after it announced profits for this year would be more than 40 per cent down on what it had expected.
The profit warning was the second the company had made. In November, it also warned of a profit drop which saw its share price drop by almost half.
The stock had been a top performer for Barramundi and was specifically mentioned in its annual report, but its fall has resulted in a loss of around $20 million or around 20 per cent of Barramundi's portfolio.
Also in November, almost 10 per cent of the portfolio was invested in Credit Corp but Barramundi manager Frank Jasper says he has been reducing the fund's exposure over the past few months, although he still broadly believes in the sector and the company.
"We are still of the view that it is bent, not broken," he told Stock Takes. Jasper said the share price drop was indicative of the current attitude to stocks where investors "shoot first and ask questions later" for any companies with negative news.
But other market players have been baffled by the fund manager's buy high sell low approach - initially Barramundi bought 7.85 per cent of Credit Corp at prices up to A$10.75.
It then sold some shares at A$5.80 and bought them back at A$4.83. This week it sold down more shares at A$1.30. Barramundi originally listed at $1 a share in October 2006. It peaked as high as $1.66 in May. -