One of the highlights for the stock market since the pandemic hit in March, has been the way that after nearly 20 years we are in a genuine bull market for small caps. The point was underlined by the AIM market’s 20% rise for 2020. It has also been underlined by the failure of bears to successfully attack small companies.
The latest example of a shorting failure has been vertically integrated CBD company Zoetic (ZOE). Its shares soared 16% to 80p, and of course nearly 100% above the alleged correct valuation of the stock. Indeed, in an echo of the Reddit Army / Gamestop, it would appear that investors are actually looking to buy stocks that the shorters are targeting. They also seem to have cottoned on to the way that shorters making money take money out of the pockets of retail investors – not exactly a Robin Hood state of affairs. In the meantime, Zoetic shares have been supported in the wake of the interim results last week in which it said post Period end it had enjoyed significant traction, particularly through the AATAC distribution agreement.
What few will disagree with, bull or bear, is that crypto miner Argo Blockchain (ARB) has been one of the stocks of the year to date. The company consolidated this position with the announcement that it has taken a 25% stake to become the lead investor in Pluto Digital Assets, a crypto venture capital and technology company that connects Web 3.0 decentralised technologies to the global economy. Argo said that it believes that this investment into a proof-of-stake focused digital assets company complements its leading position in the Bitcoin and proof-of-work consensus mechanism.
As if to prove that it is actually a small world in small caps, Pires Investments (PIRI) said that it is seeing progress amongst its investments, particularly in the crypto venture capital and technology firm, Pluto which it had entered into last month (adding another £100,000 to its position.) This was not surprising given the announcement from Argo Blockchain regarding Pluto, something which completed a £2.5m fund raise for the DeFi group. The validation by Argo, led to an 11% share price rise for Pires – resuming its recent strong bull run. It also led to major shareholder in Pires, Riverfort (RGO) rising 2% on the news, and delivering its own £300,000 investment in Pluto.
It would appear that formerly fashionable retailer French Connection (FCCN) saw its shares rise a whopping 40%. As well as having that legacy play long angle that the Redditt / Gamestop brigade are / were so fond off, there were those in the market suggesting that the rise in the stock was tracking the idea of vaccine salvation for the High Street this Spring, as well as the threat to the online retailers of a sales tax. With all of this, there was actually little need for the obvious bull point of M&A – something which could have, but has not happened at any time in the past two decades.
One of the more important aspects of a small cap company’s progress in the City is the broker that represents it, as well as the other service providers. This can be key, especially at the start of a company’s journey. Having been born out of a RTO in December, cybersecurity group Brandshield Systems (BRSD) was able to bask in the validation of appointing Shore Capital and Tennyson Securities, brokers who are very much specialists in the mid cap space.
Of course, one would barely class the London stock market as being open for business, if we were not on the receiving end of a RNS from Xtract Resources (XTR). The updates from its Bushranger Project are currently verging on being a daily event. On this occasion we were told that drilling in hole BRDD-21-002 has been extended to the current depth of 846.5m, past the original planned depth of 750m, as the hole has continued to intersect copper mineralisation. Xtract said that drilling will continue while the hole remains within the mineralised zone, while investors were keeping in mind that the longer this process continues, the better the asset is likely to be. All the while there is the Anglo American buy back option, underpinning the venture.
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