SMALL-CAP DRIVERS: M&C Saatchi; Kinovo; oil explorers
One of the great advertising campaigns was the iconic 1979 poster proclaiming ‘Labor Doesn’t Work’. Beneath those words was a queue of unemployed snaking in the distance.
The Conservative Party election billboard ultimately helped Margaret Thatcher to power and polished the credentials of the advertising group Saatchi & Saatchi.
Its founders, Maurice and Charles Saatchi, after an acrimonious break with S&S, founded AIM, a publicly traded M&C Saatchiwhich in turn became a fixture on the global advertising and marketing scene.
Lately, however, it hasn’t exactly been smooth sailing for business.
M&C Saatchi’s iconic 1979 poster proclaiming ‘Labour Isn’t Working’
In fact, if we were to change the word ‘Labor’ to M&C in the famous ad campaign quoted above, then the statement would not be too far off the mark.
The company, which counts Google, Uber and TikTok among its clientele, has never really recovered from a 2019 accounting scandal. Reputational it might have, but the share price tells a different story.
This goes a long way to explain former VP and tech entrepreneur Vin Murray’s bid interest in M&C.
His £254 million bid for the group was rejected by the board as “laughable”.
Step up Next Fifteen Communications Group, which negotiated a friendly £310m takeover. Tim Dyson, its chief executive, said it would bring together “two highly complementary businesses”.
The net effect of the week’s horse haggling? Well, the bankers and advisers will have done well.
And also M&C investors are about 39 percent better than a week ago. On Friday, the share price was hovering around 222 pence, about 25 pence below the nominal offer price for cash and shares.
Next Fifteen shares held firm at 1,272 pence, suggesting the City likes the deal.
Looking at the broader market, the AIM All Share was on a similar rollercoaster path to its benchmark, the FTSE 100, as it ended a fairly turbulent five trading days with little change.
Investors will be thinking ‘what was that all about?’ as the US, particularly the tech market there, precipitated a global wobble.
The biggest drop for the week, down 36 percent at 11p, was in the real estate services group. kindovowhich collapsed after a former subsidiary went into administration.
While the rising tide of oil prices has provided a boost to most ships in the sector, two of the minnows on the exploration side of the industry were friendless, and with no great explanation for their plight.
Perhaps investors expected more than empire metalswhich fell 20 per cent to 1.27 pence in the week after the release of what appeared, at least at first glance, to be some encouraging drilling data from its Western Australian gold asset.
With all the moves in the micro-cap level of the market inhabited by Argos, Petrel, Empire and others, it’s worth noting that selling several hundred shares can result in a sharp jolt to the downside.
This is a recurring flaw in the market making system used to set prices at AIM, and one that has a particularly punitive impact on thinly traded or limited holding stocks.
The same mechanic can also work in reverse, sending some stocks higher on minimal volumes.
grease fitting arrow scan at least it had a news flow to back up its 44 per cent jump to 18.52p when the Calgary-based explorer said its Colombia well had discovered 90ft of potentially hydrocarbon sands.
It was an incredible, or possibly incredible, week for the radiation and biosensing technology company. Kromek Groupwhich revealed that business momentum accelerated more rapidly than anticipated in the second half of the fiscal year.
Shares of Kromek rose by about a third over the course of the week to 10.62 pence.
Provider of legal and professional services. group of knights was another stock up a third, although it’s hard to tell if that was due to this week’s trading update or the acquisition of the curiously named Coffin Mew.
Coffin Mew is a Portsmouth-based law firm and the acquisition brings 102 new workers under the Knights banner.
The business update revealed ‘on-line’ performance and after a profit warning in March, this helped reassure the City. Shares ended the week 34 percent higher at 126 pence.
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