Undignified behaviour

The Financial Conduct Authority (FCA) is reportedly watching with interest after the share price of Dignity, one of the UK’s biggest funeral providers, behaved ’unusually’ during the Covid-19 outbreak. It is of course no surprise that Dignity’s share price is rising as the UK’s coronavirus death toll stays in the hundreds each day, yet it is the ups and downs during the Competition and Market Authority (CMA) investigation into funeral services that are catching the financial watchdog’s eye.
The Times reports that the FCA is aware of sharp increase in Dignity’s share prices just days before the CMA surprise announcement it was to shelve plans to further regulate the funeral services sector. The Times says there are fears of a potential leak of the CMA report since shares in Dignity climbed by 26.6 per cent, from 331p to 419p, two days before publication on 13 August this year.
At the same time, short positions in the funeral director also fell. According to Short Tracker, which collates public FCA data on shorting, positions began dropping from 4.18% on 10 August to 2.93% on the day of the announcement. It’s possible that smaller short positions not made public by the FCA were also closed out. So it’s possible that firms closing short positions – and as such buying back stock – played a part in the share price movement. The events have attracted some political interest. Labour MP Siobhain McDonagh – an advocate for tighter regulation of funeral homes – contacted the City watchdog, leading the FCA to say it was monitoring the unusual price movements. While the FCA is yet to confirm any leak, it is clear that the CMA report has positively influenced Dignity’s share price at a time it was already enjoying a boon in business thanks to the Covid-19 crisis.
PS. Out of interest, we took a quick look at voting turnout at Dignity. At its 2020 AGM it was just 60.6%. In 2019, it was 63.4%, in 2018 it was 64.4%, in 2017 it was 78% and in 2016 it was 79.6%. Part of this is no doubt explained by Dignity falling out of the FTSE350 in 2018, but turnout dropping by a quarter is pretty striking.

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