AIM Low
One can get an appreciation of how buzzing at market is at the moment given that we are five years on from the pandemic low just below 600 on the AIM All Share index and even after this week’s one percent rebound this section of the market is still under 700.
Remember that that low was delivered when it could very well have been that the world was coming to an end. Of course, this week given the geopolitical shenanigans especially with a reference to Russia-Ukraine, we could once again be at the same kind of juncture. While the tariff debacle has not yet been sorted out, this along with the geopolitical horrors of the moment mean that it is quite understandable small caps are not exactly on fire.
However, it’s still appears that nothing has really changed in terms of the powers that be encouraging private companies to list on the stock market or public companies to remain there. This was highlighted by the announcement that under Mike Ashley’s auspices, model train maker Hornby (HRN) has decided to quit the market. And why not? The cost of being listed for a company like Hornby would be north of £0.5 million, as well as all the other Draconian / Kafkaesque red tape/regulation. And of course, if you are really lucky, you will have some psycho blogger or bulletin board warrior with an axe to grind or a short position to get on side, attacking you without any right of redress. Funny how this criticism only attacks companies that are too small or do not have the resources to fight back legally.
Another interesting aspect of the stock market which perhaps does not get as much coverage as it deserves, is the subject of grandstanding. This is when the writer/commentator waxes lyrical about how they said a stock was a buy many fractions of the share price now, or of course a short, many multiples of what it is now. Obviously, most of the time this is click bait to get more followers/traffic in order of course to make more money.
However, it does rather fly in the face of that very British concept of being understated. That said, looking at the top 10 riser over the week, it can be said that at least half of them were successfully identified on a charting basis near the lows here at Zaks Traders Café via the Bulletin Board Heroes. But rather than making a song and dance out of it, the right thing to do is to be thankful that the charting worked, and to be fair note when stocks perhaps did not behave as they should have. It is called balance, something which is sorely lacking in the digital age.
For instance, Sealand Capital (SCGL) was once again well below its 200 day moving average at 1.25p after peaking in January at 12p plus. This was despite a new blue chip board appointment. Also and perhaps rather on undeservingly, Rome Resources (RMR) fell by nearly a quarter this week as the company raffled with insurgent near its project site this decline was even though with the company’s drilling program is now complete, and we are awaiting the maiden inferred mineral resources estimate. Given that tin is currently rocketing and the raison d’etre was of Rome being a leading tin producer, the markets treatment of the company continues to appear harsh. That said, nothing is as harsh as the treatment of Arrow Exploration (AXL), which according to X comment has $22m in cash, no debt, and a 2nd rig incoming. Perhaps it should be rather less modest regarding its achievements.
“How To Spot the Next Big Investment”
I do occasionally read the articles of Ian Cowie at The Times. But unfortunately this week he is away and his place has been taken by deputy money editor Holly Mead. Luckily the void that Cowie has left has been filled by the Holy Grail searching discussion of “How To Spot The Next Big Investment”. Or perhaps not. We already know that it would’ve been great to buy Fever Tree or Amazon the day after they listed, and we all also know that it is better to buy shares and companies that are profitable than loss making. We even know that Warren Buffett and Benjamin Graeme have formulas approaches for making billions, I would still maintain that Ms. Mead aside, identifying the next big investment is as much to do with personal skill and talent as the skill of being a great F1 driver or a tennis player is a personal skill. Indeed, it may be the case that even the pursuit of charting is something which despite all the rules and indicators are still a skill rather than a science.
This Week’s Risers:
CapAI (CPAI) led the pack, and indeed blew out charting expectations, following the appointment of a high profile tech guru, while Xtract Resources (XTR) felt the appreciation of its Silverking project drilling update. This was made all the more sweet by the shares already starting to rise before the news and following through to close at the highs of the week. It will be interesting to see whether the stock can fall through on the upside something that it has not done for quite some time steak building as well as a better tin price was the explanation for the sharp rise in Andrada Mining (ATM), with JLE Group hitting the shareholder register at 5%. Hopefully this will mark the end of an extended beer run in the stock and perhaps catch a few bears who have had it rather easy in recent years, off guard.
The soaring gold price and news of a partial lifting of mining license suspension in Mali gave a welcome boost two shares of Cora Gold (CORA). Given that this was a positive bolt from the blue, one would expect the stock to re-rate further of the back of January MRE, and of course gold hitting $3000 an ounce.
For some strange reason (?), Roquefort (ROQ) has been and continues to be in the eyes of the bears something that has clearly done well for them over the recent past. Indeed, this week of fundraise at 1.5p would have given many of the shorters what they wanted. What is interesting though, in the wake of the news is the way that the shares finished the week at 1.9 pence, well above the private placing price. This kind of strength is normally a good fundamental indicator, and together with the resignation of the CEO and NED, as well as significant disposal news, we could actually be seeing a decent inflection point for the company. Perhaps the bears will now leave it alone and let it get on with the job.
Stocks rising on no news:
It has to be admitted that the part of the week in small caps that I particularly enjoy is this section on companies rising on no new news. The reason for this is two fold. First is the way that in a liquidity hungry market is inconceivable that anyone would spend even a penny on a share purchase on unless they were very keen indeed. Oh, by the way do we still have stamp duty? Oh yes we do. How does that help the London stock market gain a competitive edge?
Getting back to stocks rising on no news, and it was another strong week for Moroccan potash play Emmerson (EML) whose shares have already risen more than 200% since the turn of the year. One would only presume that there is positive news coming here, over and above the way that the shares spat out all but the most loyal holders in the autumn. This was when it appeared all hope had been lost regarding the authorities in Morocco giving the company a green light.
Forestry management group Woodbois (WBI) has had multiple false dawns in terms of both the fundamentals and the share price. The last we heard is that the company had postponed a loan repayment to a creditor with hopes that a settlement could be agreed. Presumably the slight recovery in the shares at the end of the week suggest that there could be a positive resolution, even though it has to be said the company still appears to be flying by the seat of its pants.
It is that rare that there is a company that I have not heard of on the land stock market, This is normally due to a name change of a previous company. In the case of Revel Collective (TRC) one would question the current merits of the name, but show some respect for a company involved in hospitality, one of the areas that the government seems to be intent on destroying. Presumably, the merry making associated with bars and pubs does not tie in with the hair shirt mentality of socialism. We will obviously see more pain in the week of the next budget, and the effects of the previous budget kicking in next month. But at least the company saw it shares rise 28% this week.
With copper back near three year high, it is understandable that a company which is fully leveraged to the price such as Asiamet Resources (ARS) has seen its share price recover. However, we could see a rather more definitive rebound than the 20% we saw during the week if as one presumes, we have fresh news regarding the company’s financing position in relation to its BK M copper project. The last major news was that the capital cost estimate has been reduced by nearly $60 million as of the end of December, and the company said then that it was well position for project financing in 2025. It is perhaps the case that one or two telepathic investors are positioning themselves for possible positive financing news.
If there is a company that could be described as having come from hell and back on more than a couple of occasions, it would be Tungsten West (TUN). With tungsten becoming one of those critical World War III friendly metals and the company itself pushing to bring its Hemerdon mine into production, we could be looking to a sweet spot for the Cornwall based group for the rest of this year. Even this government appreciates the efforts of those in the critical metals space these days, and the importance of securing the supply chain in this area.
Interviews:
Finally, on the interview front this week I was delighted to speak to Cake Box (CBOX) in the wake up the £22 million and Ambala purchase, an area that is close to my heart and my stomach. Having been a customer via my parents of Ambala Asian confectionaries ince 1972, it would appear that Cake Box have done what the younger version of myself could only dream of which was to buy a sweet shop.
Zak Mir interviews Bernard Aylward, CEO of Kodal Minerals (AIM: KOD), following last month’s announcement that it has successfully produced its first spodumene concentrate at the fully-funded Bougouni Lithium Project in Southern Mali.
It was also interesting to speak to Ryan Mee, CEO Fulcrum Metals (FMET), as he put the argument together for looking at the gold tailings project company at a time when the yellow metal is going through the roof. The cost of production from tailings is clearly rather than more economical than mining the stuff from scratch.
Of course there are companies that are mining gold successfully and represent the kind of next big thing investment that some in the market may be looking for. Indeed, Thor Explorations (THX) was and has been highlighted on several occasions here at Zak traders Café, with the sizzle this week being the way that the shares have pushed a new all-time highs in line with the gold price. One would expect for more now that the slack in the stock has finally been taken up.
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.
