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Collapse of mining group shares fail to get it into the 90% club

Tahmina Mannan
Written By:
Tahmina Mannan
Posted:
Updated:
06/11/2012

The collapse of coal mining group, Bumi’s share price is still not low enough to get it in the 90% club despite losing 80%, says binary options trading firm Banc De Binary.

The 90% club consists of those companies that are still part of the FTSE All Share Index that have lost more than 90% of their value over the last five years.

Bumi’s fall came on the back of concerns over the group’s corporate governance, board unrest and a falling coal price.

Banc De Binary says that the 90% club currently has 13 members, including current and former FTSE-100 companies RBS, Thomas Cook and Punch Taverns.

The single biggest loss over the last five years is that endured by shareholders in pub giant Punch Taverns, which has lost 99% of its value since 2007.

The former FTSE-100 company at their 5-year high cost investors 989p but has plunged below 7p.

Banc De Binary says that Punch Taverns is not the only former FTSE-100 pub group to have lost the vast majority of its value. Competitor Enterprise Inns has also seen 88% knocked off its share price since 2007.

Oren Laurent, CEO of Banc De Binary, said : “The pub industry in the UK has been devastated by the recession – it was reported earlier in the year that 12 pubs close every week in the UK.

“However, Punch Taverns and Enterprise Inns have been hit the hardest as they made the mistake of loading themselves with billions in debt just as their core markets started to shrink.”

“They are now struggling to refinance this debt, meaning that a recovery looks unlikely in the shorter term.”

Banc De Binary says that the question for investors is whether members of the 90% club offer potential to bounce back.

Laurent added: “Investors can find some great value investments by ‘bottom fishing’ – some of these companies may well recover when the economy improves. This investment style made a lot of money for some investors at the end of the last recession.”

“On the other hand, some of these ‘bombed out blue-chips’ may be too heavily saddled with debts, poor assets or redundant business models to ever recover