2014 was a truly horrible year for Quindell (LSE: QPP) as its share price collapsed from a 52-week high of 682p to a low of just 25p, wiping out many investors.
The turnaround in 2015 has been instant and startling. When a stock whose misfortunes youve been idly following leaps 29% in a morning, you have to sit up and take notice.
When its up 77% in a week, you really start to wonder exactly what you have been missing.
Is this just some crazy fluctuation designed to torment the unwary or could last years annus horribilis become this years annus mirabilis?
Gotham Horror
You dont need me to repeat all the woes inflicted on the troubledAIM-listed insurance outsourcer in recent months, which saw the chairman and founder Rob Terry forced out in a row over controversial share deals, on top ofa vicious attack by short sellers, led by Gotham City Research.
And you will no doubt know that the uncertainty lingers, as PwC undertakes an independent investigation intothe companys accounting practices and cash-generation prospects.
This years dramatic rebound has been driven by news that Quindell is looking to boost its cash position by disposing of several divisions, which should give it some stability. The board also gave assurances that it was comfortable over the companys cash position.
A Burst Of Tosca
It got afurther boost fromthe news that hedge fund Toscafund Asset Management had invested 16.1 million in the company, takinga 5.1% stake.
Investors were buoyed by this vote of confidence, especially given Toscas track record of winning risky recovery bets.
If Quindell can get its act together its prospects remain bright, as it operates in two rapidly expanding areas.
Its professional services division covers personal injury and motor accident claims management, while its digital solutions division targets the accelerating area of telematics spy-in-the-car insurance technology.
But this is a company that has grown rapidly on an acquisition spree, which makes it hard to judge exactly how much value there really is in the business.
Good Or Bad?
I like investing in good companies on bad news, my worry is you would be doing the reverse.
We wont know how good Quindell is until PwC reports, so any investment you make now is a gamble on the outcome.
Nor do we know exactly why Tosca is investing in the company, and whether its motives tally with a long-term Foolish investment strategy.
Finally, this is a crazy stock right now, and that 77% share price surge could just as easily reverse if sentiment changes. If it continued, that really would be a miracle.
There are far safer ways to make big money in 2015.
If you adopt the right strategy this year, you could take a giant step towards joining the growing number of UK millionaires who earned their wealth on the stock market.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
