AIM Again
The deliberate involuntary euthanasia of the AIM market has of course been going on for years. So much so that my coverage of the process is not designed to be a protest intended to revive it. We live in a society where if you do not know if you have a voice, there is a deliberate reason. We are also in a society where even if one called the closing price of the FTSE 100 for a year, you would not accidentally find yourself writing, or appearing in the mainstream media, or even get invited to the Small Cap Awards! I am actually quite happy with this state of affairs, one has just got to get on with things and do one’s best.
What is perhaps a little surprising is that the great and the good keep on calling for change at AIM / the LSE, apparently thinking that because they are great / good something is going to happen – it is not. The oil tanker has been set in the wrong direction for decades, and as companies being suspended because of audit delays, it is actually speeding up.
Rothschild
The latest contender is none other than Lord Nat Rothschild, quite chuffed that he is sitting on a company, Volex (VLX) with a market cap of £650m on AIM, which presumably on the Nasdaq would be valued at $2bn. But of course, what is the odd $1bn between friends? Our Nat starts off in a CityAM article with saying that we need a more engaged investment culture in the UK. Good idea. But since the 1990s the housing market has basically been a one way bet. So why take a punt on stocks? For instance, if you win the lottery the first thing you don’t think of is, “I am going to buy £1m worth of Diageo (DGE).” Instead, you buy the biggest property you can find. Yes, this is a cultural issue. An Englishman’s home is his castle, and presumably this also applied to those of all backgrounds and genders these days. Nat also talks above engaging retail investors directly. The problem with this is that, as I have stated previously, this area is occupied by cowboys, used car salesman and gangsters, who have absolutely no interest in the market, apart taking their pound of flesh. This cabal of characters is not going to popularise the market. None of the people who are currently employed to do so have moved the dial, especially as most of them are only there off the back of who they know. The City remains a closed shop with a very narrow cast of characters, and no amount of affirmative action can change this. Even when someone from a different demographic gets through the net, they are either shadow banned, or just assume the status quo.
Financial Literacy
Lord Rothschild’s article goes onto mention the idea of financial literacy at school, something which if it were carried out would arguably destroy the banking, pensions, insurance and mortgage industries. Of course, if we knew how much we were being ripped off, all of the above including the stock market would have to change drastically. So that ain’t going to happen, and nor are pension funds going to invest more in the market. The financial crisis ensured that institutions are forced to be totally risk averse, something the de-banking fiasco underlines.
MifID
One of the main reasons that I favoured Brexit was that I could see the EU levelling the playing field between London and European financial centres, with MifID being the particular horror in this respect. The fact that this directive’s disastrous effect on company research still has not been turned around (just proposals) means that none of the potential benefit of Brexit have filtered through. This is just another example of the establishment punishment beating of the country being so naive in believing that if it voted for Brexit it would be carried out.
The final part of what Lord Rothschild says is perhaps the weakest part of his argument, and the one guaranteed to ensure none of what he says will be carried out: that improving AIM will be good for Britain, good for jobs and innovation. Well, we know that the main policy in this country in the past couple of decades has been to kill as many golden geese as possible, whether by tax or regulation. The City has been and remains a sitting duck in this respect – the worst possible mix of birds.
Keywords / Powerhouse
One of the solutions for AIM’s many problems is for small cap companies to list and then inspire the market, over and above being taken over for a princely sum such as Keywords (KWS). This week it was the turn of waste to energy group Powerhouse Energy (PHE), to rally off the back of double good news. Positive patent news and settlement of a claim. Part of the 100% rise was arguably the way that the shares were artificially low on jitters over the claim, something which unwound itself with a massive rebound. It is interesting that PHE has been blessed by being a dynamic, high volume mover in both directions. It now looks to be on its way under the leadership of CEO Paul Emmitt, the kind of leadership that the company has been waiting on for years.
Critical Metals
Another stock that was arguably oversold and marked down excessively in true London stock market fashion, was Critical Metals (CRTM). The shares had a decent rise continue after my interview with CEO Russell Fryer. It would appear that the shares are literally on the road to success as we are in the run up to Molulu groundworks. The company’s copper / cobalt mix is clearly a winner in the current environment, a point underlined in my interview with the company.
Roadside Real Estate
Another well received interview was with Charles Dickson, Executive Chairman of Roadside Real Estate (ROAD), which was certainly a getting to know you / putting the company on the map affair. Charles’s experience in the space was made clear, and rather underlines why the shares eventually closed up nearly a third on the week.
In a busy week for interviews I also spoke with Kerim Sener of Ariana Resources (AAU), which was a catch up after several years.
As was the chat with George McDonaugh, Managing Director & Co-Founder, KR1 (AQSE:KR1). It was pleasing to find that both companies are on the crest of a wave as far as their recent histories.
Tirupati
Also on the leaderboard was Tirupati (TGR), perhaps through a mixture of short covering ahead of the requisition denouement next month, and jockeying for position on the share register. Given that two requisitions for Reabold (RBD) failed, I am just on the side of the incumbents staying in place. This is partly on the basis of the “devil you know”, but perhaps more that in its life cycle the company is at the “darkest hour before the dawn” moment operationally. Indeed, fate has deemed that TGR has not communicated achievements, leaving the axis powers to be able to point at the rest. The PR campaign ahead of next month’s showdown looks as though it will level the narrative if nothing else.
EQTEC
This week did appear to be that of resurrection for some of the small cap areas companies where there have been question marks. This was illustrated by the rebound in EQTEC (EQT), as the thermochemical conversion technology company reversed the May 17 RNS on funding, with positive refinancing news. One would expect the market to continue to re-rate the company accordingly over the near term.
It is always helpful to look at the risers of the week who have done so without fresh news. Into this category we had Katoro (KAT). It was up 30% on reconsideration of the Haneti project advancements announced last month, and perhaps also helped by Power Metal (POW) CEO Sean Wade turning up as Non Executive Chair earlier this year. Gfinity (GFIN) was also in the rising on no news space, after its March pronouncement on the prospect of improved profitability.
Phoenix / Roquefort
As far as the companies to watch as potential risers going forward, it seems amazing that Phoenix Copper (PXC) is still where it was share price wise before the $80m bond it has raised. Surely under 20p and with copper one of the metals of the moment it deserves positive consideration. Roquefort (ROQ) bounced in the wake of the signing of a term sheet for the out-licensing of its Midkine antibody portfolio to PDC FZ-LLC. However, the 20% rise this week seems to be rather mean, especially in the wake of the CLN raise and board changes at the company, something which when combined with the licensing deal should see the company deliver on the potential it has always had. In addition, CEO Ajan Reginald is a stalwart of the biotech sector, something which is in itself enough to get the company over the line.
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