Trader’s Café with Zak Mir: A Week In Small Caps, Saturday 3rd December 2022

With the FTSE 100 above 7,500 and the small-cap index also 10% off its lows – to where it was in September, it may be the case that we can relax to some extent.

Author @ZaksTradersCafe

The month before Christmas tends to be the strongest of the year for the stock market, and one would hope after a rough year for investors a little window dressing may get us some further gains as most investors nurse their wounds.

Even better, the bigger picture with people collectively swallowing the high tax approach of the Sunak Government, without complaint, means that for 2023 the stock market looks to have discounted this fiscal headwind. The only thing missing perhaps now is for confidence to return enough for the flow of IPOs to return.

Ironically, with cash so hard to raise currently, it was the Aquis Exchange which has taken the lead in terms of bringing companies to market. Indeed, during the week I attended the “Britain’s Got Aquis” event, which perhaps rather appropriately was held at the Royal College of Surgeons.

There I met some of the great and the good of the stock market, maybe more in the business rather than investors themselves, but if nothing else, people seemed as keen to find their next multi-bagger.

As far as the stocks of the week were concerned, perhaps there were not the big multi-bagger moves. Nevertheless, some situations still caught the eye. One of the more intriguing was GreenX (GRX) where some were licking their lips at the prospect of a claim against Poland. This could mean up to £737m in relation to the Jan Karski and Debiensko projects. The rise in GreenX shares was sharp to end the week, delivering a market cap of £85m. We shall see whether the gap between the current valuation and the possible claim narrows in coming weeks.

Perhaps with a less dramatic story than GreenX came from shares of Invinity (IES). Here we have seen a 50% rise on the week, as the company illustrated with its latest news. This highlights the benefits of a business which is able to scale up. This can be the key aspect for small caps, and is clearly something for investors to fix on before they press the buy button. In this case, the scalability is set to be driven by expansion for the energy storage manufacture into Taiwan and South East Asia.

On the downside, there were some lessons to learn from companies that did not please the market, at least in share price terms. In the case of Orosur Mining (OMI) the stock fell by a third to end the week, even though it could be argued that the latest assay results may not be as relevant in the bigger picture for the company as the stock price decline might imply. What we can glean here is that the market may have improved in the past month, but investors still seem ready to sell out first, and ask questions later.

Author @ZaksTradersCafe

Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.


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