A close to the week, I hope it has been good for you all.
Penny Stock Portfolio
The portfolio currently is returning a 3.8% gain as of last night assuming all holdings are equally weighted. The winners in there remain unchanged from last week – THAL, MTFB and SDX with Asiamet creeping up nicely. Petards has also had a good week. This company has some real potential, it reached all-time highs on Wednesday. The momentum indicators look very strong and balance sheet is great for a company of its size. Petards specialise in security and surveillance systems, so very much a growing industry. The business is profitable – a net profit of £910,000 in 2016 with £1.05 million forecast in 2017. The AIM company forecast revenues of £15.8 this year, but has confirm “at the 31 March this year, [the order book] stood at £21 million of which £13 million is scheduled for delivery by the end of the year”. The bulky contracts have put some off in the past, but it appears to me that this is fast becoming a proper business. At a market cap of £12.4 million, I think it is an absolute steal.
It’s the end of the quarter, so today we have a plethora of quarterly operational updated from ASX listed companies. A slightly different post today, I will run through more companies than normal to give my views. Some have news, some don’t. Friday isn’t the best day for news, so it is more of an overview than in-depth analysis.
I’ve been tinkering with my portfolio a bit. I mentioned a couple of weeks ago that I am at a place now where I am comfortable with all the holdings in my portfolio. It might sound odd, but rarely have I been entirely confident in my portfolio. Often, there is one mistimed trade or one big loss that is gnawing away at me. Sometimes it’s too painful to rip the band aid off and you just sit there and hope, or perhaps more correctly dream, that it’ll all correct itself.
Market Cap: £88.72m
Carrying on from my point above about my portfolio, I have sold EVRH. This will always be an exciting stock that will capture investor attention – cutting edge tech always does. I just think it is at a market cap of £80 million now and it is years away from a sustainable business model. A stock like this always has the potential to sky rocket, but I think the odds are stacked against it. The AIM company is awaiting the release of its beta app, which has been in the pipeline for the last 6 months – there is little indication from management when it will be released. No doubt when it is released, the share price will rally. Nevertheless, the difficulty will be sustaining that rally.
I wish all the best to holders, but it is a bit too rich for me now especially when there companies out there which I think have better odds of success.
EDIT: Previously stated, EVRH was “years away from revenue”. This has since been changed to “years away from a sustainable business”.
The People’s Operator
Market Cap: £10.1m
I’ve also sold TPOP.
A noble cause, but a company with some things still to sort out. Jimmy Wales has made headlines with the announce Wikitribune this week, a news platform that brings journalists and a community of volunteers together to ensure that journalism read are fact-based articles. Jimmy conceded that the initial year or two of Wikitribune will require a significant time commitment on his part, he will like serve as CEO for this period. This indicates to me that his time and influence will be limited on the TPOP venture. As Non-Executive Director, his involved with TPOP was already reasonably small. Non-Executive Directors don’t get heavily involved in the day-to-day – often their importance can be overstated. Additionally, the TPOP story is centred on organic, viral marketing. I am slightly skeptical of the business model. People are locked into lengthy mobile phone contracts nowadays – 12,18, 24 months at a time, so this will inevitably stunt any exponential growth. If the marketing does build up momentum, people will be unable to act on it because they are already tied into contracts.
Market Cap: £10.9m
Proxama had some significant news yesterday. The AIM company announce that death-spiral provider, Darwin, had clear all their shares, which paved the way for the share price to shoot up 20%. I took some flak last time I wrote about Proxama suggesting that, among other things, the overhanging issue of the Digital Payments Division sale was suppressing any rise in the share price. Investors sharply said that it was simply because of Darwin and the conditional loan note financing that the share price was where it was and that once this clears, the share price will head north toward 1p. It’s too early say with certainty, but shares didn’t kick on from their 20% closing the day 6.7% in the blue. My opinion is be wary of this one. I think there are still issues with management communications and, as alluded to previously, the sale of the Digital Payments division, which was due to be concluded at the end of 2016 – but investors are still waiting for this sale to be concluded. Like with most AIM companies involved in death-spiral providers, there are more issues than just financing.
Also, I have had a number of investors say to me how frustrated they are with the management and communication of this company. I think a lot of people are waiting for a jump to then sell out. Therefore, I think any quick rise off of the back of Darwin’s exit will be short-lived.
Market Cap: £74.4m
Motif Bio – a popular stock that I have written a lot about recently.
I built up a sizeable stake in the mid-twenties and still hold. The rally alongside Phase III could be seen a long way of it was a really easy play. Sometime all you require as an investor on AIM is patience. AIM is notoriously impatient. The more you can use that as an investor to your advantage, the more gains you will make. The shares in Motif have consolidated over the last couple of days – I expect them to rally again. 50p is the real test of resistance. It is at this point, I may look to bank profit. I’ll wait for interest in the stock to wane and for investors to become impatient during the wait for the second set of Phase III trial results toward the end of 2017. Then, I’ll plan to accumulate shares on the cheap.
However, those of you that wish to be reminded of the downside here should look at the plummet in Synairgen’s share price yesterday. After a promising partnership with AstraZeneca had propped the shares up, the major drug company shunned rights to AZD9412 after Phase IIa study data “did not meet AstraZeneca’s pre-defined criteria for progression”. Synairgen shares fell 49% yesterday.
Nothing is ever a certainty on AIM.
Market Cap: £18.8m
Looking forward, I Tweeted that I had picked up a decent chunk of TLOU stock yesterday. TLOU released their quarterly operational report today, which nicely recaps the story so far. I won’t cover it here as these reports are simply a recap, but after the recent placing out of the way, I think TLOU is at a great entry point.
I’ve been a fond follower of Tlou. I’ve held shares before, but never quite timed the entry right. There is some discontent among investors over the recent placing, but the shares have bounced back pretty well. 6p seems a reasonable support level. I managed to pick up a few at 6.25p yesterday, then a few more at 6.5p. I know the company well and story is very strong. Again, I think this company is undervalued due to investor impatience as we are currently between significant milestones for the Botswana project.
Market Cap: £29.75m
Asiamet posted their fiscal results for 2016. Again, this is simply a recap for the previous year, so I’ll be brief. One interesting point that, as far as I am aware, hasn’t been mentioned before (unless I’ve missed it!). Asiamet confirm that they “expects to receive $700,000 proceeds from the sale of its Jelai project by May 15, 2017”. This will be a welcome boost for the coffers of the AIM resource company. Jelai is Asiamet’s least prioritised asset with BKM and Beutong, which the management are working on approval of an IUP Production license, it is not a surprise for the company to divest of its least attractive asset. Furthermore, investors will take confidence from evident appetite to acquire assets in Indonesia. Also, the necessary due diligence undertaken during a sale of an asset like this will increase investor confidence in the quality of Asiamet’s two primary assets, BKM and Beutong.
Market Cap: £20.6m
Advanced Oncotherapy announced that the AIM company has drawn down the second tranche of £1.3 million from death-spiral provider Bracknor. This is 2 of 10 tranche. I can’t imagine anyone is still holding this stock. If you are, you be wise to get rid of it in my opinion. I can only see the share price going in one direction. This drawdown is simply the tip of the iceberg with 8 more to come after this.
Market Cap: £14.4m
Harvest Minerals provide a “POSITIVE UPDATE” today. Full title: “ARAPUA FERTILISER PROJECT – POSITIVE UPDATE”. I am always very wary when the company tries to tell me an update is positive. Therefore, I am skeptical. It seems the market is also, which is why the share price is down 10% this morning. The AIM company, which deals in potash, confirms that they have submitted a Final Exploration Report. Alongside, this Agronomic test work is ongoing – results are due shortly. The general update seems to be that things are on track. The reason the shares are down is perhaps due to the Full Mining Licence application. In March, Harvest Minerals stated in an RNS that “Full Mining Licence application to be submitted in April 2017”. However, now the company states “full mining license application process is underway” despite it being the end of April, so basically the company have missed this target. The AIM company have extended the trial mining permit, which be sufficient for their needs whilst the Full Mining Licence application is considered.
If there are companies that you want me to cover in the coming days or have significant news due imminently then let me know. My aim is to deliver value to readers, so I want to ensure I’m doing this as much as I can.