The week seemed to be full of very good small-cap risers. There were three stocks up over 100%, Defence (ALRT), ImmuPharma (IMM) and World Chess (CHSS). There were another three stocks up over 50%: Gem Resources (GEMR), Orosur Mining (OMI), and Surface Transforms (SCE).
All of them apart from World Chess, have been consistently highlighted / flagged / charted here in the run up to recent share price gains. So why would investors or companies need anything more than read Zakstraderscafe.com? I do not have the answer to that. Perhaps it is force of habit. Perhaps it is other people’s sales and marketing abilities. But I do wonder when I see CEOs being interviewed by a platform with a few hundred followers, or another new “me too” “investor platform”, what kind of conversation and persuasion went into the process.
In fact, the plethora of small cap risers this week, 17 companies were up over 30%, rather made me think that the AIM All Share Index may be delivering some kind of breakout. Alas, this is not the case. It is only up 2.9% this year, versus 12.5% for the FTSE 100. So one can see where the money is going. The problem for AIM remains the cost, the red tape, and worst of all the double talk regarding anything being done about this. The reality is that for many being listed is about as attractive as being a front line politician, with all the scrutiny, but none of the fame, or riches.
The question is whether more of it can go the small cap way? At the moment the answer looks to be that we are lucky to even be where we are. Companies like Oberon (AQSE:OBE) and Peel Hunt (PEEL), who are at the coal face of the small cap market, made decent noises this week regarding the end of three years of hell in the space. They both have decent plans for the future. But in the present or near past, we have had the benefit of a flood of cash coming into the market for the Bitcoin Treasury stocks. The question now is whether the market can widen its brief in terms of areas to invest in for small caps. The obvious one with gold once again hitting new highs are explorers / producers of the yellow metal. I recently interviewed Thor Explorations (THX), which continued its bull run, and it is worth keeping an eye out for under the radar ACG Metals (ACG), the copper / gold producer, which is actually “only” up 80% so far this year, as opposed to the 3x of THX and is currently playing catch up. Both the chart and the recent Cantor Fitzgerald initiation note both pointed to 900p plus. This was when the stock was around 650p a couple of weeks ago.
Stocks Rising On News:
As mentioned above Defence Holdings (ALRT) led the way this week, with a well received “First Classified AI Product with UK MOD”. It would be good to know numbers. But presumably, by definition, details of deals will be light. Indeed, given how hush-hush this area is, it feels churlish to ask. We are also still only at the stage where the market is still feeling its way regarding ALRT opportunity. Although highlighted from near the 0.1p base back in May, the best call of late was below 0.5p for a 1.30p technical target which was hit on Friday. Who says charting does not work? Two groups of people: the first those not in the stock. The second those who have no skills in the area, and what to peddle their own agenda / offering. But at the end of the day, what is more useful, a road map for investors / traders as to where a stock may go? Or an open ended vague list of plus points that the market may or may not have already factored in. The charting call on ALRT for an initial 0.8p target was already in place before this week’s news. Similarly, with ImmuPharma (IMM), there was a charting call on the Friday before the Monday 1 September news of a new patent application. In both cases cynics might suggest that the smart money was buying before the news, and this was something which showed up in the charts. I am delighted if this is the case, and that clairvoyant traders left their trail. But both situations worked from a technical standpoint.
Sticking with the pharma angle, and a stock which appeared to be rising sharply every time it was mentioned in the Bulletin Board Heroes charting video: Hemogenyx (HEMO). The big win here was a rather ambitious 900p charting target here. The shares are going into a golden cross between the 50 and 200 day moving averages currently, and a break of 730p resistance. After the CLN announcement this week, a retest of 900p plus looks possible.
Emerald mine owner Gem Resources (GEMR) was certainly back in business after the longest time. And it came back with a bang. A decent £2m fundraise, as well as solid backing both verbal and financial from newly appointed Executive Chair Louis Ching. It is clear that the show is very much back on the road, and that the £1m market cap is very much an entry level number.
Orosur Mining (OMI) is a company where I have been on the case in terms of the charting like a broken record, especially on dull days when there are not many charting situations to look at. Here the shares gapped up through their 50 day line in July, and have had a 19p price channel target. This was exceeded on Friday, with a fresh implied target now as high as 29p on the cards as soon as the end of this month, while 19p holds. The fundamental trigger was perhaps this week’s warrant exercise news. But really it is the backdrop of progress at Pepas.
Sticking with the mining theme, or at least the exploration area, and we had the spectacle of interim results from titanium group Empire Metals (EEE). Here the headline was a wider loss, but the market not caring as it is focused on the magnitude and the prospects of Pitfield. As someone who has called up the shares from sub 10p and always been on the bull tack, seeing the shares peak at 83p this week was gratifying. That said, I did receive an email asking whether this peak could be the near term high water mark for the shares, akin to the peak that most mining companies have as they complete the proving up of assets. In terms of the Lassonde Curve, the implication is that EEE is at the end of Stage 1. The emailer suggested that EEE at current levels is akin to Greatland Gold (GGP) when it was in the 30p’s before it fell to single figures a few years ago. According to a potential interpretation of Lassonde, at the moment EEE is just about to complete the end of its discovery period, and go into the so-called orphan period. Let us see whether the theory works this time.
World Chess (CHSS) is a company which I have previously hardly covered, largely on the basis of being put off the company by a crackpot blogger, who influenced me when they should not have. But here it is today, up 150% on the week. The trigger for the rise has ostensibly been a business update this week in which the company said it has reached one million registered users, has appointed a former Chess.com design lead, and is preparing for a major mobile app relaunch. What is not to like? Even Bobby Fischer would have been proud.
Stocks Rising On No New News:
One of the week’s best risers on no fresh news was a recent IPO, Medpal AI (MPAL). The shares made their AIM debut on August 26, and the health monitoring app company has seen its shares rise by a third in the past week. I have reached out to the company, as I have been aware of the Drummond brothers, who are on the board here. Let’s see if they would like to talk.
Cobra Resources (COBR) continues to benefit from the massive re-rate in rare earths, helped along by the actions of the totally non-tyrannical powers that be in China. That said, given the way law and order is being delivered in the UK, China looks like a party. The last official big RNS from COBR was that it had acquired an option to buy a copper project, at the end of last month.
SEED Innovations (SEED) has perhaps been most famous in the recent past as being a company that is painfully under-rated as compared to its NAV. This state of affairs looks as though it is finally being corrected. Shares of the life sciences investor have been on the front foot since last month’s proposal to get into robotics and AI. Even better, billionaire investor Jim Mellon was returning to the board as non-executive Chairman. SEED was up 38% this week.
Catenai (CTAI), which rallied hard in April on AI news, saw its shares rebound again. The company added Bitcoin Treasury to its portfolio, and presumably we are in the run up to fresh news given that there has not been any for some weeks.
Gold going up clearly helped Landore (LND), who earlier in the summer gushed about its BAM Gold Project in Ontario, Canada. Conroy Gold (CGNR) also found the rising tide in the gold space helped its shares up 29%, with Galantas Gold (GAL) up a similar percentage.
You May Have Missed: GenIP (GNIP)
Shares of GenIP are back near the 20p level, the main support shares in the technology business providing Generative Artificial Intelligence (GenAI) services to help research organisations and corporations commercialise their innovations have had since they came to AIM last October. What is attractive here, and with any AI based company, is that it has real world applications, rather than just being a gimmick added on to an existing business, or even worse, getting on the AI bandwagon full stop. What has been impressive here has been the traction the company has been getting both geographically, as well as in the academic world. The academic area is particularly pleasing given the way that this is a built-in validation of the GNIP model. With a young CEO, Melissa Cruz, who has effectively grown up in the space, and is clearly determined to get the message out, one can imagine that the momentum revealed so far will continue to build. This is a scaleable, international technology business. If it was on the US market it would probably already have a $100m plus market cap. No doubt the London market will catch up, sooner rather than later.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
