Perhaps the kindest thing to say about the current state of the stock market is that we are experiencing a period of rotation. The question is whether this may be the forerunner of outright selling due to turbulence in the bond markets. However, the jury remains out. Nevertheless, it can be observed that outperforming small caps tend to suffer extreme profit taking, and after the easy ride since the autumn when one could buy almost anything that moves, now it is special situations which seem to be the mantra to go for. In particular, “following the money” or at least the TR1 announcement, look to be wise in current conditions. This is especially so given the way that the penny has started to drop regarding the taxation calamity of this week’s Budget.
TR1 announcements are perhaps the most reliable way of following the money, something which we have seen with the recent announcements at shell situation Ridgecrest (RDGC). Here tech investor tag team John Mahtani and Ashok Patel continue to build their stakes, with the latest being that Mr Patel has gone from up from 3.75% to 4.43%.
Also of interest on the TR1 front was Christian Cordier moving up to 4.93% to 8.66%, something which seems timely given the way that his target company Copper focused Bezant Resources (BZT) remains near to its recent support zone – despite the metal soaring of late. Completing the TR1s of interest was Mountfield Group (MOGP), where Richard Edwards, Richard Potts and Raglan Road Capital all entered the fray, something which was difficult for investors who are close to the market not to notice.
Now that we have Cellular Goods (CBX) floating freely, it could be argued that the most anticipated IPO will be Pluto Digital Assets. The momentum behind this decentralised technologies company has led to an excess of £20m being raised. Stock market investor Riverfort (RGO) said it has invested a further £700,000 in Pluto, to take its holding to 4.2%. It was understandable that next generation tech investor Pires (PIRI) in which Riverfort has a near 18% stake itself, said that it has raised its stake to 6.4%. Given that the stock market is now invariably backward looking, it remains to be seen when the implications of these investments in Pluto will eventually sink in to the valuations of the companies who have invested in it?
One of the more interesting battles in the stock market currently is centred around the diagnostics space in general and of course the COVID-19 testers. Given that there are now many players in the field, the key differentiators have now got to be both accuracy and arguably, even more importantly, speed. Given that Braveheart’s (BRH) Paraytec system looks to be a leading amongst the runners and riders at the moment, with a result in a couple of minutes, it was perhaps not too surprising that today’s news from Braveheart updating the market led to a 14% rise in the shares. That said, the market does appear to be somewhat divided on what the valuation of the company should be, given that the stock has been less than half and more than double the present share price year to date.
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