The Spring Budget is due to be presented by Chancellor Jeremy Hunt and given the lack of any media build up, one has to assume that it will be a damp squib. After all, if the Conservatives are to lose the next election, a give away Budget would be in vain. If they are able to pull a rabbit out of a hat and beat Labour, it would have meant that the giveaway was a waste of money. Money which could have been heaped instead on the ongoing Big State / High Tax mantra we have seen since the 1990s. One would guess that the British ISA may be delivered, as it is by definition, a token gesture, and too little, too late.
Bull Market Vibes
Last week’s Week in Small Caps coyly suggested that we have a nascent bull market on our hands, and this week one could say that there was further evidence. Ironically, the signs of a bull phase come in three main manifestations. First, we see more fundraises getting over the line, and of course IPOs. Second is that on a day to day basis we see more and more stock risers of 20% plus. Finally, and perhaps most importantly, we see the final demise of companies that were the casualties of the bear market. Leading the charge in this respect at the moment are the likes of Saietta (SED), Horizonte (HZM), Canadian (COPL), and new shell Verditek (VDTK) where stock market supremo Bob Holt will turn the now rebooted company into EARNZ. It is to be hoped that the new dawn for the market will tie in with the coming of Spring.
The Week’s Winners
Another sign that the good times are back comes from when risers keep on rising. Examples of this include the 100% gain for Powerhouse Energy (PHE), as the market warmed to the signing of an initial 5-year framework agreement with Australian based, National Hydrogen Ltd. Even better was the line in the RNS that PHE will not require any capital for the deal. So, it would appear to be a win-win / no brainer initiative by the company. A rather more esoteric story came from another of the week’s big risers which managed to hold onto sharp gains: GCM Resources (GCM). Here it was enough for the company just to say that it has identified a replacements for its non-executive Chairman, and also found someone to be non-executive director. Given that the shares rose 76% on the week, one would assume that these mystery directors are of a great calibre of Cannon & Ball. If only it were Lord Hanson and Lord White.
Although one suspects that only around 2% of the people reading any Renalytix (RENX) actually understand what is going on there, this week the shares rebounded nearly 50%, as the company said that the United States Government has approved adding the company’s FDA de Novo Marketing authorized test, kidneyintelX.dkd, to its 10-year Governmentwide Acquisition Contract for early-stage kidney disease bioprognostic™ testing services. Quite a mouthful. But after the rather horrific share price rug pull in H2 2023, there has been a decent bounce for RENX, which looks set to continue.
Last week Ensilica (ENSI) received an effusive mention from “The Tipster” Lucy Tobin, doing the job that I always wanted to do when I grew up. Our Lucy quite correctly mentioned ENSI’s exposure to the microchip boom, especially with reference to AI. Unlike most tips the rise in the stock was not a one day wonder. But it was backed by a RNS a day for Monday through Thursday, including a $20m contract win and a £1.1m placing.
One of the stars of last summer was Optibiotix (OPTI) as it managed to see its shares capitalise on the alleged demise of artificial sweetener Aspartame’s cancer scare. This event snapped years of the company not being able to get the market to “get it”, perhaps largely because of the way it communicates with the market. But now it is on the zeitgeist one might expect the international sales growth to do the talking.
Direct Line Insurance (DLG) was the blue chip highlight of the week, with the company rejecting a £3.1bn bid from Ageas. Of course, we have been told how cheap the UK market is, and that many companies like DLG are ripe for the taking. However, it could be that they are currently so cheap that no buyer would want to pay double or even triple the pre-approach price. For instance, in 2015 DLG was trading at 400p versus 207p at the end of the week. At the same time, if I meet any more smug people who apparently already owned DLG before the bid…
A company whose rise I did enjoy was model train group Hornby (HRN). This is because it does appear to be a good old fashioned stakebuilding story, and one that might logically have legs. Sports Direct owner Frasers now has 8.9% of the company. There seems little reason for it not to keep on going, especially given the way that at 35p the shares are still as cheap as chips as compared to in the pandemic. And of course, people will always love trainsets.
We were speaking about management changes at GCM Resources (GCM), and it is interesting that for Katoro Gold (KAT) there have been heavyweight changes in this respect. A particular standout is the arrival of Sean Wade of Power Metal (POW) fame as Non-Executive Chairman. Wade, the £825,00 raise recently, and the prospect of a new CEO being announced mean that KAT is well and truly back on the map.
Speaking of heavyweights, there was certainly one arriving at Good Life (AQSE:GDLF). He came in the form of David Craven, the main who managed to win the National Lottery license of Camelot – no mean feat. Joining GDLF, the luxury prize draw and rewards company, as Board as Non-Executive Chairman. He will succeed Keith Harris, obviously not the one of Orville fame. GDLF seeks to take its place in the rapidly growing prize draw space, but do it via a subscription model.
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