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Look at the late buying here... similar story at Ceres ( but in smaller size). These stocks are underpinned by institutional investor buying now...the professional investors need to show they’ve got this fuel cell theme at least partially covered.
I hope that gives confidence to private investors to try and hold on for the ride...if we have institutional buyers in size taking advantage of private investor panics to acquire stock then the best thing we can all do is starve them of stock and make them buy higher up.
agreed. institutional money clearly very confident to put money in at this level, despite market mayhem. with two clear catalysts ahead of end H1 (which is only June!), this is an outstanding risk/reward in my view...
Am really impressed with the thoroughness of the Hardman report. The best I’ve seen from them, I think. It gives me even more confidence in the company.
Note the valuation and peer analysis. It’s very, very easy for the valuation to get over 300p, but I won’t take the fun away from those who choose to read the doc....
I think that’s entirely rational as a strategy. You clearly run the risk of having to buy more higher up if there’s a positive RNS but you’re a grownup and you may well benefit from buying lower down, too.
For me, a long term holder of Ceres, ITM and AFC, this virus induced pullback isn’t fun but it is necessary. The stocks all moved very, very fast and that’s a problem because the investors I want to see building positions and appearing on the registers are the institutions, not more people like me and you. Institutions don’t like buying into price spikes like we’ve seen in recent weeks ( in fact, they can’t because the volumes are not there).
This ‘exogenous shock’ pullback gives these institutions the chance to start to build. Let’s hope they take the opportunity to start nibbling....The attraction of these stocks is that if these institutions have green sustainability / clean energy mandates, they’re going to have to buy one of these days. This theme just ain’t going away.
Def worth a look through today’s full year results slide deck at croda (obviously a key ITX license partner already), pasted below.
You can see just how well positioned Itaconix is in terms of the bio-products. It’s a space that all the global spec chemical companies are trying to land grab as quickly as they can.
And no, that’s not me making a claim that ITX will be bought-out tomorrow. I think it’s very likely to happen one day. But these global companies want to buy sales and will spend many 100’s of millions to do that.
The ITX sales line has only just started to take off so I think it a little too early for a bid. Besides, I think John Shaw and the team are having too much fun scaling this business to sell out too quickly and too cheaply.
The key for us is to patiently own stock for the next couple of years. That’s crucial to build wealth here.
https://www.croda.com/mediaassets/files/corporate/investor-result-downloads/2019/2019-full-year-results-presentation.pdf
A great RNS.
The two numbers to keep an eye on are actually the market cap and the share% owned by John and his management team (they have real skin in the game).
£5milllion market cap is just plain nuts for a company with its own installed and paid-for production facility and a number of globally branded green product lines, already supplying end consumers in North America and Europe.
Note that for this basic argument, I’m choosing to value at zero, the patents and ‘know-how’ around itaconic acid where these guys are global no.1, the potential markets in EM and Asia and potential product growth in a whole range of bio-plastics, nappies, etc etc etc.
The market has already started to aggressively price in future growth in the green hydrogen stocks ( AFC, ITM, Ceres, etc), surely green polymers are next??
Very exciting.
Interesting to note the RENE RNS - schroders have jobbed on a 16% holding to a German specialist fund. IF schroders were to keep us then the assumption would be that they will backstop / anchor any cap raise. This would be a significant vote of confidence in the business model and likely to protect us from any brutal dilutive raise....
Editorial note from the CEO:
“LOXL2 partnering
I attended the JP Morgan conference in San Francisco earlier this month and 90% of my time there was
devoted to discussions with companies interested in licensing our LOXL2 program. The discussions were with companies that have been engaged in due diligence since our last science updates in Q4 2019 and also some newcomers that are looking to build a portfolio in fibrotic disease after their own clinical trial successes in diseases such as Idiopathic Pulmonary Fibrosis, Chronic Kidney Disease and NASH. There continues to be interest in both global and regional partnerships.”
I did take that as a given, but you’re right to point out that we might stay on AIM. I’d be disappointed if we do, however.
When you’re an engineering technology play with collaborations with some of the largest OEMs in the world, it just seems wrong to be stay on AIM. Ceres is a global leader now and should surely be on a globally recognised exchange.
Next FTSE review is March. Looking at the FTSE 250 constituent list by market cap, the probability that Ceres will enter into the 250, with all the attendant index and ETF buying, is very high.
Of course, anything could happen in the next few weeks but this should give comfort to private investors. Index inclusion risk may also spur other investors who have yet to make up their minds to take a view promptly.
I think machine buying around the index review will continue to drive this higher...The ETFs have no price sensitivity or choice. If it’s in the index, they’ve got to own it.
I reckon that if this RNS was released by a US company, the stock would be up double digit and tens of millions of $ of value would be added to the market cap. Of course, because AGY is completely off everybody's radars, despite RNS evidence that a chinese company is a buyer of the stock, we get nada.
This is one of the great if not the greatest misspricings on AIM at the moment, and given the Woodford debacle, that's quite an assertion for me to make.
Lots of cash, lots of great science, lots of top line growth....
"The study illustrated that a single injection protected against systemic anaphylaxis, as demonstrated via subsequent in vivo challenge, skin prick testing and oral challenge."
These articles are actually written by bots... the bot just strings together stock phrases and lifts numbers from last accounts and recent stock price performance ....as you say, they’re absolutely useless yet every click on the page adds up to a revenues from advertisers on the site.
Am bullish here, although the wider market may take it down towards 14/15. I think AFC can trade up to a market cap of around £250mn without a strategic investor on the register and/or a major partnering/license deal. It’s clear they can raise capital at will. So waiting for the large cap raise, something I was trying to do, is likely to be a mistake in my view.
If they do raise a large amount of capital it will be at a price a lot higher than this and/ or via a strategic. With either a partner or strategic investor, it can join the others in the 500mn club.
I think management issued a trading update today because it thinks/knows that the seller is almost done.
There appears to be no logic in issuing an RNS like the one we saw today unless that was the case. IF you believed there was still a considerable overhang, then any management team would keep today's RNS back till later, because the seller would crush any buying enthusiasm and the positive message of the RNS would be wasted... That's my theory and I'm sticking to it!
agree with your first sentence, but i guess the wording had to be okayed by both sides.
I'm really pleased with the price action so far this morning. It suggests that the investor base has very few traders and that most/all of us are here for the long haul because we know what John and his team can do and deliver.
He's a substantial equity holder himself - as are others on the Board. It's really important / reassuring to see that management has lots of skin in the game.
As for the Itaconix product - well, the timing is fantastic and there are more product launches to come by the looks of it.
You only have to look at the charts of the hydrogen fuel cell plays like ITM, CERES, AFC to see just how excited the market can get on a green investment theme and bio-polymers, a global market growing at over 10% a year is a sweet place to be.
Agreed. Whilst the bio polymer relationship with nouryon seems to be working really well, being buried in a large sales catalogue on the chelates side has not.
John Shaw is a sales machine - if you’ve heard him present you’ll know that he knows everyone in the industry. By selling directly they don’t have to give margin away to a distributor and John is free to strike deals where and when he wants.
Great to see management gripping and controlling their business.
Only on broken AIM could a company called Skygem Acquisitions acquire another stake in a £80 million annual revenue company to take its ownership to a shade under 20%, and the stock rallies.....6%.
This company is trading at less than 1x sales (I’ll assume its valuable pipeline and IP are worth zero for simplicity) - sales that have been growing consistently at double digits for years....
I am confused and yet encouraged: If AIM is behaving this inefficiently, there must be bargains galore.
Blockbuster defined as >$1bn sales....
This from Fiercebiotech today. Sickle Cell is a blockbuster target and any licence deal that Clive and the team can land in Q1 will surely reflect that.
"Another candidate for Novartis' future blockbuster club is here.
Friday, the Swiss drugmaker won FDA approval for Adakveo, the first targeted therapy to prevent the painful vaso-occlusive crises (VOCs) that come along with sickle cell disease. The nod came weeks ahead of schedule, even on top of a priority review doled out in July.
Novartis has priced the new drug, meant for patients 16 and older, at a wholesale acquisition cost (WAC) of $2,357 per vial. As it’s prescribed based on weight, most patients would take three or four vials a month. That would translate into WACs of $7,071, or $9,428, per month."
surprised no-one else has posted info on COFRA, the guys behind the entrepreneurs fund who have been so instrumental in the recap of this business.
note that their heritage is in clothing manufacture and retail. that has to be encouraging given the xeros technology exposure to denim and garment dying / manufacture.
i think i can state an obvious fact here: there's a lot of justifiable loathing and cynicism towards this stock after the brutal dilution we've all experienced. however, the technology is what it is. I suspect that this stock will surprise to the upside in both the short and the longer term with industry backers like COFRA....
https://www.cofraholding.com/en/home/
If you look at ITM, Allianz did exactly the same thing on Sept 10/11th - sell down a small amount. At the time, I thought the most likely reason was to facilitate another institution to join the register by giving them a starter amount of equity to kick-start a build. It's next to impossible for institutions to build positions by buying in the open market, given the low liquidity in stocks like these.
It makes a lot of sense for an institution to have others alongside it ahead of a possible cap raise and to increase the kudos/status of the invested company by beefing up the register. In the case of ITM, it did Allianz no harm at all and it won't harm Schroders here, either.