Relentless sell down, page-109

There is one big change to Morgan Stanley Wealth Management's emerging companies model portfolio this month.

Vocus Communications, which had a 15.7 per cent weighting in September, has been dumped.
Its allocation was split among incumbents Treasury Wine Estates, the hungry Bapcor Ltd, Aveo Group and Aconex, while accommodation company Mantra Group retained its place as the highest conviction bet.

"We sell out of our position in Vocus Communications (VOC) within our Emerging Companies Satellite. Recent news flow and volatility hasincreased the risk profile for the stock in a concentrated portfolio," the retail broker's strategy team told clients this morning.

Fund managers and retail advisers always take model portfolios with a grain of salt.

However, Morgan Stanley Wealth Management's move is more evidence of the sentiment shift against Vocus as it seeks to bed down the acquisition of Nextgen Networks and deals with turnover on its shareholder register and within its own ranks.

Morgan Stanley Wealth Management's call comes only days after another broker, CLSA, published a detailed report looking at Vocus' financial statements and earnings outlook. In that report, the CLSA analysts slashed the 12-month share price target to $5.55 from $8.55, and downgraded Vocus to sell from underperform.

His note to clients cited accounting concerns and worries about integration and staff departures, despite Vocus' shares underperforming the market by about 30 percent since the company reported earnings.

Vocus chairman David Spence quickly hit back at the company's critics, saying he stood by the financial statements his board signed off in late August.

Vocus shares are up 1.6 per cent to $5.70, breaking a six-session losing streak. The stock has dropped 22.3 per cent this year, and 4.6 per cent since this time last year.

Source: SMH Markets Live, link