The Princess Of Wales
In the end this week, the news of the Princess of Wales was pre-eminent, and it served to get everything in perspective for many of us. As well as wishing Her Royal Highness a speedy recovery, the revelation of cancer was particularly jarring given the speculation and treatment of Catherine in the media, both social and mainstream. We were reminded how common it is for people to enjoy picking on those are not capable of defending themselves, very often for personal gain, or merely entertainment. We were also reminded that the grass is very often not greener for the rich and famous.
The Firing Line
One is rather reminded of this state of affairs in the small cap arena, where those involved can be in the firing line, whether it is merited or not. It is interesting that growth companies are particularly vulnerable as they very often do not have the financial / legal power to fight back against keyboard warriors. Those who attack them know this, and presumably having failed to make a living at other less immoral activities, do so via shorting and clickbait. However, picking on people who are weak, or when they are down places them in the same category as a schoolyard bully, or geopolitically, like your everyday frustrated middle-aged tyrant. It is always noticeable how such sociopathic people are rather less good at receiving the kind of treatment that they deliver to others.
AIM vs FTSE 100
This week the FTSE 100 finally delivered another onslaught on record highs through 8,000, alas well after the likes of the Dow, Dax, Bitcoin, Gold et al. Clearly, interest rate expectations have helped the cause, as well as the read across from other markets. However, the concern is that it is taking rather a long time to filter down to the small cap area / AIM. Given the lay of the land this may take some time. For instance, the AIM index is still way off its 2024 at the start of the year.
Fresh Blood
The hope would be that fresh blood will arrive to the rescue. We already have evidence for this with Power Metal (POW) announcing a pre-IPO for Power Arabia. Indeed, the company has already made decent contributions to re-populating AIM, with plays such as Golden Metal (GMET) and First Class Metals (FCM). Indeed, there is potentially more to come in the form of First Development Resources, an Australian exploration group. Its attraction is primarily the way that its gold-copper / rare earths – lithium mix is on song at the moment. Its Western Australia asset is in the Paterson Province, which has been highly prospective. One looks forward to, and expects the £2m IPO to get over the line in quick time.
Energy Green Transition
While some may complain that the stock market is not a good place for growth companies, citing the cost, the lack of liquidity, and all the red tape, others like Cathal Friel simply get on with the job. Both hVIVO (HVO) and Poolbeg (POLB) have been resounding successes in their space, and it would appear that Friel is looking to shift into a fresh area with European Green Transition (EGT). Obviously, the clue is in the name, and with the Olserum Rare Earth Element Project, it is already on its way. Given the track record of the management one would expect the fundraise and AIM listing to go ahead quickly and smoothly. And of course, we sorely need as many new contenders as possible on AIM currently.
Helix Exploration
One can say that while others are gushing about uranium or rare earths, it may be that just as hot currently is helium. We have already been treated to a massive result at Pulsar Helium (TSX-V: PLSR), with the shares up over 4x from the 30 cents IPO in Canada. Looking to follow in Pulsar’s footsteps, this time in Montana, rather than Minnesota, is Helix Exploration. The big win here already has been the way that the company was able to raise over three times its original goal of £7m. Helped along by the presence of former Helium One (HE1) supremo David Minchin, and industry leader Bo Spears, one would expect the stock to be catnip for professional and retail investors alike, when it hits AIM next month. Indeed, given that it is likely to be capitalised at a fraction that HE1 currently is, we are looking at a ground floor opportunity, which could actually overtake HE1 in terms of its timelines well before 2024 is over.
The Week’s Winners
One of the best fundamental signals as far as the small cap space is concerned is when a stock rises on news of a fundraise, normally a dilutive event. In the case of Symphony Environmental (SYM), the shares ended Friday over 50% up, off the back of having raised £1.4m, and up to another £500,000. The manufacturer of biodegradable plastic products looks as though it has bounced back from the rather partisan EU judgement against it. One would expect the company to push forward outside the EU protection racket zone, with the new cash raised.
Rising on no news was plugin overdraft group Fiinu (BANK). Interestingly enough the company delivered a “cold water” RNS in January, saying at the time that it was “puzzled” by the then share price rise. Presumably, the anti money making powers that be will force the company to pour cold water on its share price again. However, we already know the company has a decent cash position, and that in the banking world raising c £40m to get a licence is small beer. One hopes that the company has cracked it, and can get back into double figure share price territory where it belongs.
A stock which rose sharply this week, and whose area of interest may yet prove to be topical, was Genincode (GENI). Here the shares bounced over 60%, as the company focused on the prevention of cardiovascular disease and risk of ovarian cancer, said that its Risk of Ovarian Cancer Algorithm test, has received a National Institute for Health and Care Excellence recommendation. Such a validation suggests that the £10m market cap could be regarded as something of steal in a matter of weeks.
Scrap magnetic recycling technology may not sound like a very sexy area to be involved in. However, it could very well be the case that Mkango’s (MKA) move into this space, could be a company maker, and in turn a decent share price mover. In January MKA announced that its subsidiary will partner with CoTec Holdings Corp to roll out scrap magnetic recycling technology in the US. Of course, there is demand for this tech, and it can be rolled out worldwide, given that the need is obvious.
SkinBio
Finally, a situation which may be one for those who like somewhat binary setups. It comes in the form of SkinBiotherapeutics (SBTX). Here while the top level activities of the company could be said to be in order, what perhaps spooked the market was SBTX’s statement at the end of February when it said it was exploring alternative financing. This must have been somewhat disconcerting for lender CLG / Maquarie, in that SBTX after drawing £1.6m of a £5m facility, put the brakes on. Perhaps someone did not check out the lay of the land fully ahead of the facility? What can be said is that most companies in the biotech space are not like hVIVO, where JP Morgan have once again topped up their stake. Instead, it is a rocky ride, with stop / start revenues, black swans, and wobbly timelines. But at least once SBTX clarifies life after CLG there could be a decent rebound.
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