Virgin Money (VUK) soft trading update weighs on shares
VUK -11.27%: Provided a trading update overnight and the stock was whacked on the market today. Firstly, the rationale to own VUK was about relative valuation and their cost out program that would ultimately drive returns. That rationale has been tested recently as they now focus more on digital transformation. That costs money now for (hopefully) returns in the future. This trading update talked that the process, outlined yet more restructuring charges which have been a very consistent theme for VUK in the past few years, then went on to sell the dream of outer years. While we believe in the strategy they have outlined, the market clearly has little confidence in their ability to deliver on it and instead todays focus was on costs rather the benefits. We own VUK in our Growth Portfolio and while we are not adding to positions here, we view todays price action as excessive.