The last 7-10 days have seen a clear shift in sentiment throughout aim, we have seen a bunch of companies which have been weighted to the bottom seemingly start their shift toward respectable levels, sadly many of these are still very much depressed as private investors are still nursing the pain of aim within their portfolios. For weeks if not months we here at Docslaymanchatter have been predicting a turn in the tide for one very simple reason, and that is the distinct need for cash!
Many aim listed companies do not generate revenue and those that do often don't create enough to keep the train pootling along the track, this ignites the annual funding season which looks to be fast approaching. Either we will see a jump up in liquidity, interest and placing's or by the summertime we will have dozens upon dozens of junior resource, tech & bio companies hitting the skids going bust. I tend to follow the premise that the tier 3 city outfits need these leeches of the investment world as much as the low life facilitators need them.
A huge proportion of the square mile is solely reliant on companies that are in incubation, this is the terminology for genuine embryo companies but also lifestyle pay day creations. Our job is to try and spot the good apples in the barrel, clever investors recognise the cyclical nature of all aim companies thus find trade opportunities across a broader range. We have to be a matter of fact about which ethos we are following, to jump back and forth can be a challenge. Personally I don't follow any set guidelines as after years I find the markets more compelling and rewarding by moving inline with the changes but this can be something of a fast pace to follow so advise against it until you have a strong set of principles that are working effectively.
Like learning to drive you have to feed the wheel and use your mirrors, after you pass you can roll your seat back and crossover hands, although similar to investing you need to have the credentials and ability to pass the test before you can hit the open road alone. Lets look at a few companies that are becoming interesting in the small cap markets.
TEA: Formerly SPR the company has changed name, moving away from the button company sperati. TEA team of Jason Drummond and well known uber wealthy investors has pegged this tiny micro cap on the map. Investors like myself are banking on the company making positive steps however this is more a forecast from a blinded position rather than some inside line into the TEA nerve centre.
Union Jack Oil: Seems we have been talking about this company for a while, we have had some pretty good moves in the company, yet we all stand by our beds waiting for the official line that we have a commercial well which is producing ahead of expectation. This would be the ideal end to a turbulent run for many of the partners operating in testing times, it's my belief that a good result here will bode well for all including Union Jack. We await the confirmation over the forthcoming weeks, remember folks UJO has a strong cash position and are funded through to 2016.
Sound Oil: Have bounced back hard after a slip towards 9p after the OP crash, The company has a full nearterm calendar with Nervesa and Badile pending. To be clear this is the second drill in an already commercial project at Nervesa, the company in 2015 should if the roster is to be believed have a solid cash flow and big operation finalising towards year end.
Sefton Resources: My old mate Daniel Levi (BMD) has his work cut out here, but then Dan probably wouldn't have it any other way. Sefton has to have the cross guarantee lifted as soon as possible to allow the company to breath again. Without BMD intervention Sefton would have surely suffocated at the hands of the old regime. I wish him well and hope to book a busy slot in his diary to catch up - stay tuned to www.valuethemarkets.com for that interview.
Paternoster Resources: Once Zoltav finalise the sale of there remaining few PRS shares the companies SP should rebound nicely above the current level of 0.22-0.25p I anticipate a correction north of here and with a rumoured £20,000 of Zoltav overhang left to go we should see that sooner rather than later.
Solomon Gold: Jumped from the oversold position as private investors were tempted into the stock once some liquidity returned, I bought this company based on its depressed position with a theory that whilst the 5yr chart said 1.3p possible the markets were nowhere near as bad as 2013 when the whole european currency was about to collapse (which it hasn't to date yet!)
A few companies to watch for interesting developments are Boxhill Tech,African Potash,Sunrise Res,Uk Oil & Gas,Barron Oil,Verona Pharma and Wishbone Gold.
All the best
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(These are but opinions derived from my own experiences and thoughts and are not adopted as a statement of fact)