RE: ALM Deeply Discounted Still4 Dec 2018 20:52
They've more than doubled in one week, but are all over the place during the latest session. Graeme Evans reveals what's causing this volatility.
Even though today's share price surge for Allied Minds became a damp squib, a positive update from one of its portfolio companies still serves as a welcome confidence boost for the listed business and its backer Neil Woodford.
Boston, US-based Allied, which funds technology and healthcare start-ups, saw its shares rocket 13% in early deals, taking a rally from last week's new low at 36.5p to 129%. However, the shares were down 10% on the day by mid-afternoon.
Allied shares are currently worth less than half the level of the firm’s highly-anticipated IPO in 2014, when shares were listed at 190p before jumping as high as 725p a year later.
Ever since 2015, Allied shares have been in a downward spiral after an activist New York hedge fund argued some of its start-ups were significantly overvalued. Write-downs and a restructuring under new chief executive Jill Smith have followed, with Allied now built around 12 portfolio companies
One of the leading six ventures in this line-up is HawkEye 360, which is developing radio frequency (RF) technology to help monitor global activity across air, land and sea and assist with emergencies.
It is planning a constellation of small satellites in low Earth orbit that will collect information on specific radio signals worldwide to provide high-precision radio frequency mapping and analytics for clients' needs.
Today, it announced the successful launch of the company’s Pathfinder mission, which is its first cluster of three, formation-flying small satellites.
HawkEye 360 CEO John Serafini called the successful launch "the most biggest moment in our company's young history".
He added: "I am extremely proud of what our 30 person team has accomplished over the past three years. We combined our varied expertise in small satellites, signals processing, and data analytics to bring a new source of RF information to the market.
"This is the first time a commercial company has utilized formation flying satellites for RF detection."
Investors joined in the euphoria for a time as Allied Minds’ shares jumped by as much as 14% before settling back at just 2% higher at 75p.
Broker Jefferies, however, is more optimistic and has a ‘buy’ recommendation and target price of 99p. HawkEye 360 is not as closely watched or as big as other key investments in the portfolio, such as Spin Transfer technologies, but Jefferies said today’s update was potentially significant.
They said it could help validate HawkEye 360's technology and highlight potential user cases.
Jefferies added: "We see the launch paving the way for future commercialisation, and another boost to investors' confidence in Allied Minds, which remains deeply discounted despite validation and improved funding."
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