The Moment Of Truth
After 14 years of Soft Labour, arguably, something we have had since 1997 (New Labour), or the Thatcher coup in 1990, we are looking to years of Hard Labour. The irony is that the Conservative party, after being so loyal to the centre ground, is going to be kicked out for almost universally delivering Labour policies. But rather like in the 1974 election, it is not so much the policies, but the people delivering it who are getting the boot. Indeed, I have been told that 2024 is more of an analogy of 1945, where the price for winning the war – on this occasion stabilising the economy and inflation, is to be kicked out of office. Labour are set to find a magic money tree – taxing the rich, who are like the 1970s probably already abroad. However, with taxes already at post war highs, it is difficult to see how it will avoid bankrupting the country as it did in 2010 (Gordon Brown’s message, 2008 (not its fault), 1976, 1967, and 1951. Low tax, small state, seems further away than ever.
Nightcap
Against such a backdrop one could argue that the UK stock market is actually on a decent level. Above 8,000 on the FTSE 100, and flat on the year, quite an achievement given that we are losing listings by the day. The latest being bars operator Nightcap (NGHT). As I have stated on many occasions – the cost of being listed, the red tape / bureaucracy, the chronic undervaluations courtesy of what is effectively a price fixing cartel, all mean that those who chose to be on the stock market have to be very confident indeed, or just have a great business ideally worth more than £100m. But at least companies coming to market do now know the lay of the land, making sure that they have all their ducks in a row. The latest example of this looks to be Rome Resources, moving to reverse into Pathfinder Minerals (PFP). With experienced management which has a first class record in DRC, one would expect the tin play to hit the ground running in terms of production by the end of the year. The company has raised more than it was originally looking for, £4m. The strong demand for the deal – well oversubscribed by retail and institutions, certainly bodes well when the shares are due to come to market in July.
Plant Healthcare / Kendrick / Simec / Ethernity
That said, in the small cap space things did have something of a sparkle this week. After being a charting buy here just above 4p last month, peptide producer Plant Health Care (PHC) agreed to a 9p a share takeover. One of my favourite charting set ups, the bear trap island reversal was the signal here. Shares of Kendrick (KEN), the Scandinavia focused explorer, have more than tripled in recent weeks, with director Colin Bird having bought shares. The stock was called up here almost from the lows. Sustainable energy play Simec (SAE) pulled a rabbit out of a hat with the shares soaring on news of strong annual results. The bear trap gap reversal to the upside last month was the giveaway here that something positive was on its way. A falling wedge breakout at 0.65p was the signal to the upside the week before last at Ethernity (ENET). The shares spiked to double this level on a U.S. contract win for the data processing technology group. I am sure that no one guessed this was about to happen.
Helix Exploration
But enough of past charting wins. It is all about finding the new ones. One of the more enjoyable IPO aftermaths has been Helix Exploration (HEX). The shares closed the week at 22p, boosted by last week’s acquisition of the Rudyard Project for the helium explorer, for just $250k in shares and cash. HEX is due to drill two fully funded appraisal wells in Q3 2024, and given that this is the case the raising of the price target here by Oak Securities from 39p to 93p would appear to be bang on the money.
Ananda / Good Life / Incanthera
Given the alleged reputation of the Aquis market, which the powers that be on the challenger exchange have done everything except address head on, it is always pleasing to see companies there doing well. A highlight this week was Ananda (AQSE:ANA). Here the shares were up 22% on the week, having more than doubled since the start of June. The latest catalyst was that the company’s MRX1 drug candidate was effective in trials regarding cardiac fibrosis and heart failure. This could and should be a game changer not only for the company, but also for giving credibility to the CBD based therapies in general. Luxury prize draw and rewards group Good Life Plus (GDLF), which has managed to hide its light under a bushel since it came to market in the spring, rose 20% amidst stakebuilding and a 4.24p Tennyson price target. Incanthera (AQSE:INC), the best riser on Aquis this year, felt the benefit of an investor presentation. Ironically, one of the few times I have seen such presentations actually work, for what is a very exciting dermatology and oncology technology play.
Wildcat
Finally, shares of upstream petroleum play Wildcat (WCAT) continue to shuffle around near the low end of their range. We have not been treated to an update here for over a month, either in the form of the esoteric Catflap Newsletter, or a more conventional RNS. Nevertheless, the company remains one of the better risk / reward plays in its space, especially as soon as the appropriate Man from Del Monte / Man from the Ministry gives the company the thumbs up. While the market may be not be keen to wait much longer, one can imagine that the Sudanese are as keen as anyone else to deliver a Production Sharing Service Agreement. This point has already been underlined by the way WCAT already passed a due diligence process conducted by the South Sudanese Ministry of Petroleum in February.
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