Shares of British guarantor lender Amigo Holdings PLC (LON: AMGO) soared 26.8% after the company revealed that US investment giant J.P.Morgan had acquired a 5.2% stake in the lender despite its current woes.
Today’s announcement is a significant boost for the lender, currently struggling to settle customer claims running into the millions. Amigo suspended all lending activities to address the UK’s Financial Conduct Authority (FCA)'s concerns about customer complaints.
The investment by J.P.Morgan is a vote of confidence in Amigo’s future. It indicates that the investment firm believes that the lender will resume operations soon enough. However, the FCA is yet to approve the settlement scheme proposed by Amigo earlier this year.
We covered Amigo Holdings earlier this week, where we noted that the lender’s shares were trading near a resistance level and would need a positive catalyst to break above the level. Today’s announcement acted as the positive catalyst pushing Amigo shares way above the resistance level we highlighted on Monday.
Technically, the lender’s price chart indicates that we are very likely to get a pullback over the next few days, given the latest rally, which started on February 12, has formed a steep shape commonly referred to as a parabolic rally.
Amigo’s prospects are quite promising given today’s development, and bullish investors could use any future pullback as opportunities to establish long positions.*
Remember, nothing is guaranteed in the markets and always use a stop loss to limit your risk exposure.
*This is not investment advice.
Amigo Loans share price.
Amigo Loans shares soared 26.8% to trade at 12.68p rising from Tuesday’s closing price of 10p.
