Christmas Party Season
As we approach the Christmas party season and the end of the serious part of 2025’s business year, it would appear that there are a few points to note. The blue chips have had a record breaking year to new highs, the FTSE 100 is up 18.9%. In contrast, the AIM All Share is up just 4.8% versus the FTSE Small Cap index at 7.9%. Small caps continue to underperform markedly, especially the AIM market. In fact, it is surprising that AIM is up at all, as the smaller companies on it are still subject to the cost, red tape, over-regulation, and alas, the stock market bullies, psychos and grifters who have ruled the roost, with under the noses of the authorities for decades.
Funny how these bullies are so well informed (and financed) in terms of legal advice, support and of course, where to draw the line on their comments. They never admit when they are wrong, only celebrate the loss of private investor money, and management failure. All the while they have achieved nothing personally, apart from ruin people’s lives. What a great way to operate. I think there are things that could be done to help the low end of the London stock market’s underperformance, and addressing this sleaze factor is one of them. It is certainly a matter for exchanges and regulators, but there are other angles.
Pricing Power
One of the issues at the small cap end of the market is that even when a company has good news, or is due a re-rate, for some reason the price remains heavy. I would say one of the recent glaring examples of this in the recent past has been WeCap (AQSE:WCAP). While the bulls have not mentioned the company’s apparent one year lock-in on its holding in WeShop (WSHP) in the US, there is by any reckoning an incredible disconnect in where the shares are at 2.6p, and what the see-through value of the company really should be. To my mind, the market here was caught out by the doomsters who said WeShop was a dud, and that it would never list. As almost every one was caught out / caught short, the impression given is that the share price will not be allowed to take off until they have covered their positions. If this theory is correct, at some point soon the right price will be seen, and it will surprise.
The same could perhaps also be said about the position at Hydrogen Utopia (HUI), where I noted that the price looked as though a lid was being successfully kept on it when the shares were in the 1p’s and the 2p’s. Why did I say that? One reason is that I have been looking at real time prices since 1988, when I rented a screen for day trading at home. Yes, that long ago. So I can kind of see when a stock is behaving itself or not. HUI looked as though it was being held down (whether deliberately or not), especially last month and earlier this month. How do we know it was being held down?
The main evidence is that the stock finally rocketed in the way that the technicals (support above a rising 50 day line / three October RSI 50 rebounds) were promising, after news on Friday that the waste plastic to hydrogen group is making faster than expected progress in Saudi. This is something which by implication could be worth tens of millions to the company in short order, even as much to get the stock back to the dizzy heights near 20p which it was when the company moved from Aquis to the main board. The current position is that as the 60% share price rise on Friday underlines, HUI is highly geared to further progress / deals announced in KSA. It has the technology, it has the network, and presumably, now that determination to get the winning transformation shareholders have been looking for.
Ananda Pharma
One of the corporate disappointments that struck me during the week was the announcement that Ananda Pharma (AQSE:ANA) the developer of cannabidiol medicines to treat chronic conditions is set de-list the company from Aquis Stock Exchange. There are a couple of points to note from this. One of the issues of being listed is the cost, and the red tape, plus the cost of more expensive audits, accountants, lawyers, and other hangers on. But one of the benefits is that your company should be in the spotlight. This should not just be the responsibility of the company, it should also be the responsibility of the exchange it is listed on, with much more in the way of promotion such as the Aquis Showcase the other week. Why do exchanges not provide much more help in terms of services providers, including PR / IR than they do currently? I have been watching Ananda over the past year, and it was notably that there was no response in the market from excellent newsflow, indeed quite the opposite. I was half expecting this, given the standard of PR/IR in the small cap space, but it is disappointing nonetheless, especially as I know CEO Melissa Sturgess has worked so hard for her company. It was notable that ANA said it had raised £10m on the public market in 8 years (not shabby), but that leaving Aquis will save it £500,000 annually. In my view the cost of being listed should be no more than £100,000, and if the taxpayer / Government has to subsidize this, rather that pay people to do nothing, so be it.
Avacta
As I have said previously, I am insulted on a regular basis online, the only place that this happens. Funny that, maybe someone has a malevolent motivation. In the real world I am generally loved, adored and respected, even though I do not seek this either. The latest in the online front has been someone questioning yesterday’s charting call on biopharma Avacta (AVCT). Ironically, the quibble was related to my statement that the shares would continue their re-rate towards 90p, versus 81p at the moment, and could stretch to 105p best case. That said, in the video I did suggest that this would only be valid if the shares remain above a 75p support line, and expressed some concern that the technicals could be scuppered by any fresh fundraise. This is even though the company’s shares have rallied hard after last month’s £16m fundraise at 63p. So it could be argued that raising more cash has actually strengthened the share price rather than weakened it.
GS Chain
I have noted the recovery in GS Chain (GSC) in recent weeks, as far as the main board tech shell from recent share price lows at 0.25p. The stock ended the week up at 0.55p, with a market cap of 2.8m. This is not surprising given the way that one would expect any deal the company delivers to have a £30m plus market cap, with shareholders of GSC to benefit proportionately in any potential RTO scenario. The smart money looks to be regarding this as a situation where one plus one equals three, and it may very well be the case that this kind of optimistic mathematics does not turn out to be too wide of the mark given how few main board shells there are.
The post The Week In Small Caps: November 30 appeared first on Zaks Traders Cafe.
