18 Oct 2019, 13:46
18 Oct 2019, 15:42
An envelope for Rico Back
When I wrote last week that short positions in UK shares held by leading hedge funds didn’t amount to a conspiracy to ‘short the country’, I omitted to mention one company that it might well seem unpatriotic to bet against: Royal Mail. Odey and BlackRock are among funds doing just that, the shares having already shed two-thirds of their value since May 2018. But investigation reveals nothing more sinister than a dim view of current management and the prospect of a pre-Christmas strike.
Last year’s share price peak followed news of the retirement of Canadian-born chief executive Dame Moya Greene, who I praised for doggedly restructuring the postal service while keeping the truculent Communications Workers Union onside. Her more rumbustious successor Rico Back is a native of Hamburg who commutes from his home in Switzerland and had to be paid a £5.8 million ‘golden hello’ to persuade him to move up from running Royal Mail’s parcels business, the European arm of which he originally built and sold to the group. Dubbed ‘Mr Greedy’ by the Daily Mail, he has alienated his workforce and won little support for cost-cutting plans in the face of falling letter volumes, weak productivity and low-cost competition in his only growth market, which is parcels. If union action disrupts the Christmas post, I suspect Back’s P45 may have to be delivered by hand. Meanwhile, shorting Royal Mail’s shares looks like a perfectly logical strategy.
Martin Vander Weyer
Martin Vander Weyer is business editor of The Spectator.
He writes the weekly Any Other Business column.