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Your stock market edge


Having started trading shares in the aftermath of 1987 stock market crash, one of the issues then was that it was rather difficult to see what share prices actually were. A breakthrough was the arrival of Ceefax, accessible on TV. The risers and fallers page was certainly an education – watching it day after day, and indeed, intraday. The goal of course was to have the stock you were invested in on the risers page. But of course, being invested in someone else’s company is one thing. Being one of the companies on the stock market is another.

Golden Goose

I notice the ongoing battle for the life of the London stock market continues, with the negative articles continuing. Simon English, Financial Editor, The Standard, wrote about the “uninvestable” London stock market this week. In reality, the only reason (and it is a big one) that the London market may be uninvestable is that it is over-regulated.

As a guess I would suggest that it is at least five times more expensive to be a small listed company, than a small cap private company. Why? No particularly reason apart from all the exchange fees, advisor fees, insurance, audit, legal et al. I can assure you none of this is going to be changed, indeed, it will get worse and worse. The City is a sitting duck for the Government tax take, especially as the country heads for almost inevitable 1976 style bankruptcy /IMF bailout. Indeed, Charles Archer of warned this week that the Golden Goose (the City) lays the golden egg, and that it should not be slaughtered. Unfortunately, history teaches us that things will have to go to an extreme before change happens – Ronald Regan’s “if it makes money tax it, it if still makes money regulate it, when it finally goes bust, subsidize it.” He was describing socialism. I look forward to the stock market bailout.

Pulling £25bn

Mr English reminded us that small investors have pulled £25bn from the market, and that new raises have fallen from £12bn in 2021, £338m in 2022, and for 2024 (a quarter of the way in) £18.5m. We could be on track for a big £100m at the current rate of raising, if we are lucky. Why invest in London which is up 7% in 5 years, when you can follow US stocks up 54% over the same period. What he does not say is that all of this is a political and regulatory own goal. It is not that other markets are doing anything special, it is that the UK is shooting itself in the foot. What a shame that any of the people who could change this state of affairs have no influence whatsoever. Even worse, most of the high profile commentors have no interest in the market, or in some notable cases think it is doomed and full of crooks. Well, if that is the case, why not do something else?

This Week’s Risers:

Modesty and humility obviously prevents me from commenting on one of the highest stock climbers of the week. So I will start off with Orosur Mining (OMI). Here I have been aware of CEO Brad George for some time, who I bump into now and again when he is in town. He is the kind of person you want to win, and in the wake news this week regarding Anzá, we have something which could be transformational for the company. Hopefully, George will get the message out over and above this mention today. Well done, Sir.

Those of a certain age may remember Sir John Harvey-Jones, former Chairman of ICI, who later starred in the Troubleshooter TV series, advising struggling businesses. This week saw someone who could be regarded as a latter day Harvey-Jones, Jim McColl, who Amigo (AMGO) said will assist the Board in identifying potential strategic opportunities for it to continue as a listed company by way of a reverse takeover. There are a couple of points here. First, is that AMGO could have thought of this a while ago. Second, is of course, how much of a dilution could happen here for existing shareholders. That said, given the hit they have already taken, just staying in the game could be regarded as a win.

Of course, given the media onslaught on the stock market, we are always on the lookout for signs that there may be a turnaround in the market. After all, the press and financial journalists are notorious for being counter indicators. Indeed, the probability is that somehow 2024 turns out to be a bumper yes, just because conventional opinion says we are doomed. I took heart from Symphony Environmental (SYM) managing to get their latest £1.9m fundraise away, and perhaps even more encouragement from the way that the shares were up by two thirds in the aftermath of the sustainable technologies company doing so.

The recent history of SkinBio Therapeutix (SBTX) has been interesting to say the least. Having said to lender CLG Capital in February that it did not want the balance of the £5m facility (after drawing down £1.6m), things were seen as being somewhat in the air. In fact, that turned out to be the low point for the company’s shares, a point underlined by the continuing rally for shares of the life sciences group after this week’s Half-Year report. One would guess that after the bear trap CLG affair, shares of SBTX will continue to rebound, especially if there is a speedy conclusion to the financing issue.

There are times when the stock market overdoes the downside on a stock, if only because the trigger for it is an easy one to get on the back off. This seems to have been the case as far as Zoo Digital (ZOO) where the damage was done by the Hollywood strikes, slightly ironical as the company was not totally loved and adored even before this event. Media companies are one of the less loved London market sectors, and tend not to shine. However, a combination of a well received trading update, and £50,000 worth of CEO buying certainly did the trick, and ZOO shares ended up 62.8% on the week.

As one investor I know well said, it was good in the case of Caspian Sunrise (CASP) to see a stock go up and stay up. This was and still is something of a rarity in current stock market conditions. Here the trigger for the Sunrise rise was considering selling all or part of the BNG contract area’s shallow structures. As is often the case these days, we have a company sitting on an asset whose value has not been factored into the market cap. Indeed, many small caps have this sum of parts being great than the whole problem currently.

A company rising by a quarter on no news this week was vape specialist Chill Brands (CHLL), with its young CEO – half my age. The whole vaping area has rather divided the market, some thinking it is the new rock and roll, and others concerned that regulatory issues could hurt the area. I for one am just sitting on the edge of my seat wait for a sales tsunami, given that there has now been plenty of time for the big reveal here. Hopefully, the rebound in the shares is the market anticipating such a scenario.

First Development Resources

This week I met up with the team at First Development Resources, the latest spin off from Power Metal (POW). FDR was next in the queue after the well received Golden Metal Resources (GMET). One would take the view that in the slightly better 2024 atmosphere and liquidity that we have, the £2m the company is raising for its IPO should not be a big ask. The highlights here are the copper-gold projects it owns in the Paterson Province of Western Australia. In addition, it has uranium and rare-earth element mineralisation at its Northern Territory Selta Project asset. Those looking for a small cap in the hunt for a major discovery need look no further.

European Green Transition

Indeed, while Power Metal spinoffs are repopulating the stock market, so is serial entrepreneur Cathal Friel of hVIVO (HVO) and Poolbeg (POLB) fame. Given that Friel has proved himself to be an investor’s friend on these two listings, we look forward to further success with his latest deal, European Green Transition (EGT). Having already raised €7.6m from professional investors, the door is now open for retail to bid for up to £500,000 by April 4. Friel will be the largest shareholder of EGT, something which provides added confidence for the market.