Corporate Travel Management (CTM) is facing increased scrutiny and concern from investors after admitting to overcharging customers in the United Kingdom by at least £80 million ($162 million). This revelation has prompted several major shareholders to significantly reduce their valuation of the travel services provider. Forager Funds Management and Wilson Asset Management have both marked down their investment in CTM by 50 per cent. Forager Funds Management is an Australian investment management firm. Corporate Travel Management is a global travel management company.
The situation has become so dire that some investors are questioning whether CTM shares will ever resume trading on the ASX. The company’s shares were suspended in August following the initial disclosure of audit problems. Steve Johnson, chief investment officer at Forager, said that writing the investment down to zero is a possibility and he “would not be shocked if it doesn’t trade again.” He anticipates the situation may worsen before it improves, as more information about the accounting irregularities comes to light.
Bennelong Australian equities fund has also been heavily impacted, with returns tumbling 9.3 per cent in November. While Bennelong has not disclosed the exact amount of their write-down, analysis suggests a substantial cut to the valuation. Wilson Asset Management’s portfolio manager, Oscar Oberg, described Corporate Travel’s recent update as a major shock and considers it one of his worst stock picks in 10 years. Spheria Asset Management has also downgraded its investment in CTM, further highlighting the widespread concern among investors.
Hedge funds are reportedly increasing their short positions against Corporate Travel, anticipating further price declines. The removal of CTM from the ASX 200 index on December 22 is expected to add further selling pressure. As investors brace for more announcements from Corporate Travel, the future of the company remains uncertain, and investors stuck in the stock are preparing for potential losses.
