So, what can be done to break out of the Catch-22? I think it comes down to not only maintaining the growth story but also additional confidence boosting measures. A few thoughts – 1) Communication policy - there could be several reasons why the share price has not moved but I think the way the BOD have communicated with the market in the last couple of years may have contributed to some extent. The OPM share price hit the highest level in June 2014. If you look at the company’s RNS history, prior to mid-2014, we used to get frequent updates when additional funds were raised. Between Jan 2013 and Jun 2014, there were 9 RNS’s talking about increased funding lines. During this time the share price (adjusted for post-consolidation) went from about 18p to 84p. Between July 2014 and now, even though the company has continued to raise significant amount of funding, and at lower interest rates than before; the number of funding related RNS’s has been 0! In that period the share price has stalled. This might simply be a coincidence but I find it quite striking. In the last couple of years, the main communication with the market has been the 6 monthly results updates (and to some extent the Pre-Close trading updates) but not much in the intervening periods. So, the investors have no idea for almost 6 months as to what the company is doing. I am excluding the acquisition related RNS’s as these were one-off events. The funding related RNS’s of the past served 4 purposes – 1) to let the market know that there is demand for loans i.e. the loan portfolio is increasing. 2) the company can raise funds i.e. lenders have confidence in the company. 3) Each RNS made it more likely that the company gets on the radar of new investors – private and institutional. 4) As the RNS’s were provided between the 6 monthly results updates, they informed the investors that progress was continuously being made in growing the company. Even now, for example, if a funding line of £5 million is agreed, in my opinion, it is still worth an RNS because at the current market cap it still represents almost 1/7th of the company. The BOD need to be commended for achieving what they already have but having achieved great results, I think it might be worth looking again at the communication policy. Drip feeding even small but material updates at regular intervals may get the share price moving. 2) Director Buys – If ALL directors (not just RR) purchased shares on the open market then that would be an immediate confidence booster. 3) Somewhat controversial but if the BOD feel that the share price is grossly undervalued, and if they have available funds, then they could buy back shares. 4) Introduce Interim dividend as well.
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