Trader’s Café with Zak Mir: A Week In Small Caps, Saturday 9th December 2022

Reading the headlines of strikes of some kind or the other every day this month takes me back 50 years to the early 1970s, which we seem to be repeating in a rather ominous way.

Author @ZaksTradersCafe

Indeed, 2022 seems to have succeeded in being a greatest hits of some of the most difficult times of the past half century, with war, industrial action, and inflation. All this has of course hurt the stock market, perhaps more in terms of liquidity and sentiment than valuations, but of course valuations have suffered.

Perhaps adding insult to injury is the way that even on good news these days, the market can sometimes be far from enthusiastic. A situation where this concept stood out this week was at Seed Innovations (SEED), where the investor divested itself of the remainder of Leap Gaming. True, saying that the overall return here was 4% may have been something of a coolant, but living to fight another day is not a bad place to be in the current market.

Speaking of coolants, fire safety group LifeSafe (LIFS) delivered a couple of RNS’s, the first centred on an upgrade to revenue guidance from £3m to as much as £3.8m. This was followed by news of the launch of the company’s new Lithium Thermal Runaway Fluid. The question here is what will happen to the LifeSafe valuation when investors click in terms of the multiple applications for this product as far as both electronic products such as phones / laptops, as well of course, electric vehicles. Given that one would imagine every EV should have one, it should be the case that the likes of Tesla et al beat a path to LifeSafe’s door.

I interviewed LifeSafe in the wake of both its news updates during the week. I also interviewed Georgina Energy for the second time this autumn, as it looks to complete its IPO fundraise for early in the New Year through Optiva Securities. The key points here are the messages that the company is not an explorer for Hydrogen, Helium, Natural Gas, it is a developer. This de-risked reminder should assure those taking part in the raise, not only in terms of the costs ahead of production, but also the timeframe.

A company rather further down the line this week was Petro Matad (MATD). This gave us both a fundamental trigger with the land registration news in Mongolia, as well as the technical triggers, the bear trap at year lows and a key reversal to the upside. Even better the stock peaked this week at exactly the September resistance line target at 3.3p. Something to be chuffed about for all.

While in a bear market the main way to get a stock price up seems to be to surprise the market / catch it off guard, there were notable risers amongst the minnows going up on no news, or maybe one should say rumours. In the case of Mobile Tornado (MBT) the shares have made good on the technical buy signal below a penny on a trendline break. They are now well north of 2p. The hope would be that the company is about to reach a denouement with regard to its unique communications platform.

There was news for Physiomics (PYC) early last month with regard to the oncology consultancy being awarded a further contract by existing client Ankyra Therapeutics. Presumably either this is going well, or there is more to look for in a similar vein. The shares were up a third to end the week.

We perhaps saw a similar delayed reaction, or maybe an anticipation, at both Quantum Blockchain (QBT), from the recent Sipiem legal claim, and East Star Resources (EST) with last month’s HEM survey of the company’s five volcanic-hosted massive sulphide licences in the Rudny Altai belt in Kazakhstan.

Skin in the game, is one of the best indicators of a company’s potential fortunes, and we have been reminded of this with a couple of situations of late. The first is market newcomer Kelso (KLSO), where the listing whose purpose is to identify, engage and unlock trapped value in UK listed companies across sectors, underlines the concept well. The CEO, CFO, and CIO have 10%, 6% and 3% holdings, after recent 6 figure share purchases.

Director share buying was also the watchword recently at Reabold Resources (RBD), after it recently saw off requisitioners trying to change the board. The Co-CEO’s and their spouses bought decent chunks of stock in the upper 0.2p’s, something which rather implies the shares ending the week at 0.24p are not on the expensive side especially after trading at more than double this level as recently as September. One would take the view that with the rebels out of the way, a new more positive chapter can start at the oil and gas group, especially in the wake of last month’s £10m sale of Corallian Energy to Shell.

Finally, this week saw Dekel Agri-Vision (DKL) step up to the plate as far as its November Palm Oil and Cashew operation update. Given the company’s twin prongs of being in the run up to ramping up its Cashew production and taking advantage of record palm oil prices, it could very well be that the shares will start to head back to 2021 and 2022 highs through 6p relatively early in 2023.

Author @ZaksTradersCafe

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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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