Trader’s Café with Zak Mir: A Week In Small Caps, Sunday 4th September 2022

Back To School

Author @ZaksTradersCafe

The new week is “back to school” in a big way for the stock market. September will be a critical month, and effectively the last chance for investors to save 2022 from being a year of almost predominantly pain. Ukraine, the cost of living crisis, and the tail end of Boris Johnson have all taken their toll. If you then add in the way that since the Jubilee celebrations most people in the City have been on holiday / switched off, the message from next week on is that if everyone is not back on their toes properly, normal service as far as the stock market just ain’t going to happen. This could mean problems for listed companies trying to finance themselves and their assets, so it really makes or break.

Could Angus Do An Igas?

For small-cap investors, the picture may have been clouded by macro events, but we did have some positive distractions during the summer. The whole point of being biased towards small caps is that they can fly under the radar (in a good way), and not get hit when say inflation or unemployment figures illicit markdowns for blue chips. The other plus point with small caps is that there are always areas which are thriving in even the most challenging conditions. We have of course seen this with stocks exposed to oil & gas, although arguably the gas area is the winner here in the wake of the Nord Stream closure. The hope with Angus Energy (ANGS) is that it will be the next “to do an Igas (IGAS), perhaps in the wake of the next RNS.


One of the biggest risers last week was Cineworld (CINE), sporting a 144% five day rise. Of course, we have seen “binary bet” situations in recent times, maybe one could say that Cineworld is in something of Amigo (AMGO) mode at the moment. The funny thing is that when the punters catch a falling knife and it does not work, they get slammed by “I told you so” pundits saying that they new the company in question would go bust / be suspended. But if like CINE, investors make a quick turn, these wise old heads seem to disappear.


As well as the binary bet trade this week, there was what could be described as the return of the prodigal son. In this case it was Clontarf (CLON), which rather let the side down in June as it crashed by three quarters. But at least on Friday the stock was up more than 100%, achieving this without a RNS. Indeed, one could argue that at least part of the explanation for the magnitude of the rise was the lack of a RNS. All we need now is for Advance Energy (ADV) and Empyrean (EME) to return to the fold, and the “good times” are back.


It is rather logical to suggest that if / when the good times do eventually return, one of the main signals that they have would be a resurgence of the number of IPOs. In the meantime we have some of the recent IPOs to get the measure of. LifeSafe (LIFS) listed on AIM in July at 75p. It is a measure of current stock market conditions that shares of the fire safety technology firm closed the week at 45.5p, even though one could very well argue that the company has ticked all the correct boxes since coming to market. Its StaySafe 5-in-1 fire extinguisher is a best seller on Amazon, and last month LIFS was granted a patent in the UK for its eco-friendly fire extinguishing fluid, FER1000. The market cap now of £10m seems rather mean, and one would imagine that there will be a squeeze back higher in the shares in the run up to results for the 6 months to the end of June due by the end of September. Even a return towards 75p – the original area for the shares to trade, would be a great result given where we are now, perhaps in the run up to, or in the wake of interims.


Another stock where the market has perhaps, treated it unfairly has been Okyo Pharma (OKYO). Here the dry eye treatment company has seen a 27% rebound in the wake of news that it is to file a investigational new drug filing to the FDA of OK-101 during Q4 2022. What the market still does not get is that being a non invasive / digested treatment, the cost, time and the rigour required to get OK-101 is far less than most FDA filings. At the same time the almost universal application and necessity with regard to dry eyes means that this could not only be a game changer, it could be a blockbuster. With a mere £45m market cap, one does not have to be the CEO of Specsavers to see the opportunity here. If you add in that CEO Gary Jacob has had 35 years of Nasdaq peppered biotech/pharma experience, then Okyo should be a walk in the park for him.

Author @ZaksTradersCafe

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