16/07/2023

Mansion House

It would appear that the powers that be are still concerned that successive Governments, and the EU have killed the gold goose that is the City of London, especially with relation to IPOs on the stock market. Too much, too little, too late is what could be said regarding Jeremy Hunt’s Mansion House speech last week, apart from the too much part. The plans to unlock pension fund money to go into start ups sounds like a good idea, but you can bet your bottom dollar they will not get involved, especially in current markets. Of more import is the idea to cut red tape with regard to prospectuses. However, listed companies are in so deep with regard to the Kafkaesque regulation and red tape, those who are current private and successful have no need to move to the public market. It is much easier to raise cash outside the LSE.

I3 Energy

One of the perks of being close to many market participants, is that one becomes something of a sounding board regarding companies where valuations are puzzling, both under and over valued. This week it was i3 Energy in the spotlight, as I was reminded that the company is still paying an 8% dividend, and trades on a lowly 3.5 p/e. If this combination is not attractive in current straightened times, one wonders what is? The icing on the cake for the bulls with the share price now the same as it was at the beginning of last year, would be that the company would attract institutional support, looking for value and income. Indeed, with i3 we are reminded that retail investors seem to prefer blue sky exploration plays, more than companies that are in production. This may be good for a bull market, but perhaps not so much in current conditions.

First Class Metals

Speaking of companies whose share prices appear to be looking in the rear view mirror, this week’s news from First Class Metals highlighted the way that after all the progress made in its first year on the market, we are still at the IPO price. This is all the more of a head scratcher given the way that the company has just raised a decent £1m to fund its strategy, with this week’s news significantly widening the company’s footprint. The deal with OnGold gives FCM an option to earn in up to an 80% interest in Pickle Lake, putting it in a far better position than it was in July last year. It is always worth noting the companies who are hungry to build on their fundamental base like First Class, as opposed to those who are content to coast along.