Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Happened to spot this morning that it looks like the Interval Fund has had a substantial in-flow of investment: https://ftcloud.fasttrack.net/web/chart/AAACX
Recently the AUM level has been around $3.8M so it looks like marketing and engaging with RIAs is really starting to reap rewards. I'm expecting positive updates from the company over the next 4-8 weeks.
More waiting and patience involved here but I think there's a few potential triggers for the start of re-rate coming along quite soon.
1. The 187.5 million 3p Warrants will expire in mid December. That takes a significant amount of dilution off the table and as per the latest Allenby note the company still feel they've plenty of "cash" in the bank.
2. Cash in-flows into the Interval Fund. As per the note, the company has been spending a lot of time streamlining and now advertising the interval fund. Hopefully we should start to see the fruits from the labour as investments come in.
3. The latest acquisition is already in due diligence so presumably the next thing we'll hear will be a completion. Given the shape and cost of the previous acquisitions I'd guess we'll see something like another $200-300m AUM minimum being added which will come along with another 'bargain price' financial adjustment.
I'm happy to continue holding.
Looking back at the latest broker note there's a couple of things that jump out re: Net Asset Value.
1. Current NAV is around 1.5pps so the current share price is already below the valuation of the assets owned by the company.
2. The note gives a clear indication of where they see NAV going on the back of the in-flight acquisition if its of similar size to AILAC: "The current share price doesn’t reflect the potential benefits of recent transactions or product initiatives. The price is substantially supported by net assets, that discounts the optionality demonstrated by the returns from the AILAC transaction – a similar deal would increase net assets to c. 2.5p a share – or potential growth in AUM; we estimate that another US$100m of AUM would move EPS into positive territory."
Feels like anything bought at these levels will turn out to be a bargain.
Very nice price, nicely done!
Be interesting to see if any positivity returns next month when the 3p Warrants expire. Taking a potential 187.5m new shares off the table for a company with total voting rights of only 467m feels like a pretty big deal to me.
I don't think anyone invested here has been suckered. Whilst there's not been an RNS from the company since the interims the key updates are all in the broker note for people to read. What we're seeing here is people losing patience and selling and others taking a longer view hence the TR1s.
Once the latest acquisition completes DD we'll see interest return then it sounds like there's a pretty healthy pipeline of other targets so 2B may not be as far away as some fear.
Latest broker note issued by Allenby this morning in case anyone hasn't seen it: https://www.allenbycapital.com/client/alpha-growth-plc/
Some positive highlights:
- The previous successful acquisition completions which "appear to have alerted sellers and regulators
of similar businesses to ALGW’s intent, with management reporting that it is being presented with similar opportunities on a regular basis, some of which are actively under review."
- "The group’s focus during H1 23 was (a) a potential new acquisition, (b) integration of AILAC and Havelet, acquired in Q4 2022, and (c) marketing the Interval Fund. The interim numbers only reflect the integration work as the acquisition is still subject to due diligence". So if DD is happening that presumably means a Letter of Intent has been signed and we could see completion of this acquisition in the next few months
- And key for me: "ALGW does however have sufficient cashflow to cover ongoing corporate expenses and costs related to reviewing prospective acquisitions and carrying out legal due diligence. The group has three stable cash generative businesses/products comprising two life companies (Alpha International Life Assurance Company and Providence Life Assurance Company Fund) and a liability assignment business (Havelet Assignment Company Ltd)."
Of course not all a bed of roses - "ALGW’s current business is self-financing despite what it acknowledges has been a disappointing take-up for its two investment strategies. These have met performance targets but not as yet seen the expected demand. It remains committed to growing these funds but in order to reduce near term reliance on this product line, reformulated its business plan to focus on its M&A activity and continue to operate close to break-even" We discussed this possibility at the AGM earlier in the year so not a surprise. Focussing purely on M&A in the short term definitely feels like the right approach.
Glad the admins are being quick at deleting some of the posts appearing here. Seems someone has an axe to grind and is trying to talk the shareprice down, presumably for some personal gain.
Not having a huge effect - yes the spread is moving down but only based on the odd trade or two per day.
We're due an update to the Broker Note following the interims so hopefully that will come through soon and answer some of the questions we all have.
Maybe, maybe not. All the discussion around this at the AGM suggested this wasn't a particularly stretching initial target that they expected to beat.
Allenby in their February broker note said: "Alpha does not anticipate that it will need to raise additional equity to secure its current acquisition targets and has demonstrated that there are willing sellers for these types of businesses. These typically consist of operations, some of which are substantial (up to c US$1bn assets) but no longer regarded as core to their growth strategies. Group’s such as Alpha can purchase these legacy insurance portfolios, for nominal sums which allows to book an upfront profit (recorded as ‘profit on bargain purchase’ in the accounts), then receive ongoing fees for management of the underlying assets"
Clearly one large acquisition around $1B AUM would pretty much get them to that target in one jump and as per the latest RNS "... the appointment of Jason Sutherland as a full-time executive has greatly enhanced our ability to identify and undertake due diligence on potential targets."
All that said I was expecting a healthier balance sheet in the interims more in line with the Broker estimates which would support easier leveraging to fund such an acquisition. That may also have led to a share price recovery which would make a placing to support a strategic acquisition more palatable.
Given the interims I'm happy for the board to instead put their focus on driving efficiencies in the group as it stands at the moment ensuring they're working from a profitable base before they land the next acquisition.
Maybe, maybe not. No real volume since last Friday when we did see some decent buying.
I also note the trade posted after 16:35 today and the fair few "amended" trades over the past few weeks. There's potentially some interest here behind the scenes.
(don't get me wrong - it's otherwise looking crap...)
A few interesting bits and pieces from the Investor Presentation yesterday. (There's a recording on the site btw for anyone who missed it)
They said they're kicking off a "promotional and visibility push with prospective investors" so expect to be giving more frequent updates now. Recently they've said that the market conditions for microcaps were so poor that they didn't feel this offered any value so perhaps that is improving.
California was no longer mentioned as a company location and Gobind said he is now basing himself in Bermuda to be located alongside PLAC which as the largest operating unit in the company sounds positive from an organic growth perspective.
They said there's more news to come on the Havelet front
They gave the total fund AUM as $61m so I'd assume that would make BOAGF $57m given AAACX is around $4m. Guess we'll know for sure next week when the interims come out.