Saturday 24 June 2017

Investor Harris keeps faith with BoI despite share sell-off

Laura Noonan

Laura Noonan

ACTIVIST shareholder Harris Associates sold off more than 55 million shares in Bank of Ireland in recent days, capitalising on a rise of up to 80pc in the bank's stock.

Harris's sell-off is revealed in stock-market documents which show the US investor still owns some 5.84pc of Bank of Ireland (BoI), making it one of the bank's largest individual shareholders.

Harris was first reported to be buying into BoI in late 2007, when news of its investments triggered a surge in the bank's share price as investors reflected on the fact that Harris focuses on "undervalued" stocks.

The US player kept faith in BoI throughout a tumultuous period, sticking with the investment as the bank had massive capital demands heaped on it by a succession of stress tests.

In July last year, when many predicted the latest €5.2bn capital demand would force BoI into state control, Harris issued an upbeat statement to clients reflecting on how the smaller banking market would help BoI.

"The Irish Government has indicated that, after various restructurings and mergers, the market will consist of only two banks -- Allied Irish Bank and Bank of Ireland.

"The diminished banking system and reduced competition should lead to higher profitability during more normal economic conditions.

"It will take time for the economic environment to improve in Ireland, but in our view Bank of Ireland will emerge on top".

Market sources believe Harris's recent decision to sell shares was triggered by an opportunity to benefit from a high in the bank's share price rather than a change in the firm's view on BoI.

Shares in the bank have risen as much as 80pc since the start of the year, peaking at 15c last Friday when 249 million shares changed hands.

Since then, the stock has bounced around the 14c level on weaker volumes.

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