Acorn Growth Share Discussion Threads

[polly65] 20/8/2016 21:39

Any idea when the AGM would be? According to investors chronicle it was due last was due to be held on Tuesday.

[polly65] 20/8/2016 21:39

Any idea when the AGM would be? According to investors chronicle it was due last was due to be held on Tuesday.

[polly65] 19/8/2016 01:48

Even though I think they did well with negotiations, a 15p price worries me a bit. I think it may slow things down post RTO due to the taking over party's having to adjust their budgets accordingly. A good will of 6p-7p per share isn't a usual offer for an RTO on a cash shell. However, I am sure they have their reasons!!

The share price has been rather irrational. A large purchase two days ago does nothing to change the price, yet 5 relatively small trades yesterday result in a rise.

[hedgehog 100] 18/8/2016 18:34

I second that emotion YB - thanks and well done are in order to the BOD.

From a pre-existing level of 9p, I would have expected a 10p - 12p RTO placing price.

[yogaboy] 16/8/2016 13:03

Interesting conversation over the weekend Polly and Hedgehog. I guess there were several indicators that made this a reasonable punt for me, primarily the very optimistic tone of the statement accompanying the results announcement on 19 July, following the high volume of June trading. I say "punt" because cash shells are always a binary investment: either they make a deal or not, then either the deal flies or it doesn't. I'm no more scientific than that when it comes to picking a potential RTO.What convinces me that a deal is now certain? Simply the specific detail of the funding announcement: specific amount, specific number of shares, specific conditions. There are no rounded figures or estimates. That stage would not have been reached without the vast majority of leg work having been done. Even the price has been agreed.One matter that we should take time to applaud is the issue price. The BOD have run a belter of a negotiation to achieve 16,517,778 shares at 15p per share - raising gross proceeds of GBP2,477,666.70 for 53.62% of the enlarged share capital. Given the share price at the time of the announcement, there must have been pressure to accept a lower price for the new issue: for example 12p x 20,647,222 shares would have raised the same sum but given almost 60% to the new investors. There is tremendous value in simply making this deal, regardless of its medium to long term prospects.

[polly65] 16/8/2016 01:10

Hedgehog,

I do hope it does withstand the tropical rainstorm of the coming weeks. Im a big fan of Grove, and for that matter some of his ideas. Unfortunately for me Im not one of the founding figures of ACO so I can't rely too much on the creative confrontation notion. I happen to flirt with behavioural finance and borrowing from its founder DeBondt, I do believe that markets either overreact or under react as opposed to the price of the stock just adjusting to the companies newly discovered intrinsic value.

As Yogaboy pointed out, the share price moved three times on one trade. That may be related to unseen trades or perhaps the animal spirits are taking over! We all know a whiff of negativity has a compounded effect.

You may be on to something regarding the due diligence. That'd explain June trading. Fingers crossed we have a major announcement on or before the 30th of September. But I'd hate to see the price collapse to the 8's without having done up my Kitchen first!

[hedgehog 100] 15/8/2016 16:34

I would add that the placing at 15p has already exceeded the best RTO placing level that I was expecting. It's not often in investing that your best expectations are exceeded, and that you get a nice surprise.
In addition, the share price is looking bullish.
So it seems a strange time to talk about expecting the worst!

But don't worry about being a pain Polly.
I believe in the Andy Grove (of thousand-bagger Intel fame) principle of 'creative confrontation': i.e. if an idea is strong, then it should be able to withstand rigorous examination.

So Polly, put the kettle on, enjoy a nice cuppa, and watch this acorn start sprouting into an oak before your very eyes!!

[hedgehog 100] 15/8/2016 16:24

With regard to the current timetable, the post due diligence corporate work on this type of major resource RTO typically takes weeks, and it can even take months. So if a September completion is firmly on the cards, then that also indicates that due diligence is complete.

They can't guarantee a September completion though, because even a relatively minor piece of info. required for the prospectus could potentially hold things up.

[hedgehog 100] 15/8/2016 16:13

Hedgehog 100 13 Aug'16 - 20:50 - 271 of 277 0 0 edit
" ... Bearing in mind the length of time that has elapsed, and the agreed placing, I would imagine that all the necessary due diligence on the deal has now been completed, and broad RTO terms agreed, lessening the risk of the deal being aborted. ... "


Polly,

Sorry about the delay in replying to your last post - I had a break on Sunday.

Obviously I'm not claiming certainty about the due diligence, I'm simply expressing a personal opinion of what I believe to be likely.

I don't believe that the conditional placing would have been agreed if there were still due diligence uncertainties, nor that the directors would have said that they were resigning. Both of those things would have been premature.

[yogaboy] 15/8/2016 14:39

Three price moves, one trade. That's a twitchy share.

[polly65] 13/8/2016 22:18

Hedgehog,

I do hope that their job has been done effectively. You know as well as I do that not everything you see and hear when it comes to AIM and main list is a reflection of the actual ensuing events. I suppose we'll pray for the best and expect the worst.

I am with you in that mining is making a return. Historically it seems to coincide with investors shift to emerging markets, and that seems to be happening now on the back of negative real interest rates. But only time will tell.

One last question..sorry to be a pain..you mentioned you think we are past the stage of due diligence. The wording of the RNS does imply that they can have an announcement even post 30/09. What makes you so confident due diligence is complete?

[hedgehog 100] 13/8/2016 21:58

Polly,

I would think that it would just fall back to about the prior price, i.e. about 9p.

And the significance of the old directors stepping down is that their job has been done.

[hedgehog 100] 13/8/2016 21:09

polly65 13 Aug'16 - 20:06 - 269 of 272 0 0
" ... Yes I do remember the last bull market but do you think the current conditions are the same? ..."


Polly,

History never repeats itself exactly - there are always at least subtle differences.

But the mining industry is inherently cyclical in nature, so the cycle always does eventually turn back up.

Of course we will need to closely examine the outlook for whatever commodities ACO's acquisition is engaged with, the the placing premium suggests that the placees at least are happy with that outlook.

[hedgehog 100] 13/8/2016 21:01

With respect to your P.S., technically a placing discount shouldn't exceed 10%:

"Discounts not to exceed 10%
(1) If a listed company makes an open offer, placing, vendor consideration placing, offer for subscription of equity shares or an issue out of treasury (other than in respect of an employees’ share scheme) of a class already listed, the price must not be at a discount of more than 10% to the middle market price of those shares at the time of announcing the terms of the offer for an open offer or offer for subscription of equity shares or at the time of agreeing the placing for a placing or vendor consideration placing."


That rule may be relaxed if a company is in financial distress, and it seems to be regularly flouted on AIM, but ACO is main-listed, and last year lost just £67K., leaving it with £1.16M.

[polly65] 13/8/2016 20:11

P.S. there have been plenty of share offers below the per share price. If you've followed the banks you may remember RBS and Lloyds banking group before the split.

[hedgehog 100] 13/8/2016 19:47

From the Investors Chronicle, 7 June 2013:

“The last major bear market for metals and mining (not including the 2008 financial crash) arguably lasted six years, from 1997 to 2002. The bear market before that - from 1992 to 1994 - lasted three. From a technical perspective, we’ve been in this one just over two years now.”


FTSE 350 Mining Index (NMX1770):

[hedgehog 100] 13/8/2016 19:27

Polly,

With the placing funds ACO will have about £3.5M., and also companies don't generally raise funds at below cash per share.

In addition, I think that it's pretty clear that ACO already has an acquisition ready to complete, which accounts for the placing and its premium.

The future will hinge upon the quality of that acquisition, but the premium says that it will be good.

I would think that the RTO will also be priced at 15p per share, and many RTOs trade at an immediate premium to the RTO price after completion, sometimes a very big premium.

And further out, the resources sector seems to be starting to recover, so a good resource company progressing its business could do very well from a low base.

Remember some of the huge multibaggers from the last resource sector bull market.

Let's see what's unveiled here, but in general I think that RTOs outperform IPOs (initial public offerings).


P.S. I'm intrigued that you've joined ADVFN just today, and that this is your first post.
I'm curious as to where you heard about ACO ... though feel free not to say if you'd prefer.

[polly65] 13/8/2016 18:41

Hedgehog, yogaboy, Kemche and anybody else who can enlighten me..I am struggling to understand something here and need experienced opinions.

I understand that the offer these unconnected investors have subscribed for is at a 70% premium right? There is no doubt they would not have wanted to pay that considering the closing price of 02/08/16 of 8p. Upon their takeover, what would stop them from diluting the share price with a new lower offering? Why?..well it would reduce the cost on their P&Ls and would buy them plenty of time to find projects to work on. I do think there is an opportunity in this stock but those invested at the 7-8p mark may want to keep in mind that nobody knows these new investors and what their plans are. In fact with the current board, no projects were ever taken on yet we stood by. Speculation is a double edged sword. I do hope the breakout is imminent but if you take a look at other examples in the past you may get my point of view.

Wishing all millions.

[yogaboy] 13/8/2016 17:21

No worries Hedgehog. With almost a year since the last AGM and the mention of 30 Sept in the RNS, we should expect to hear very soon how this is going to play out.Given the post-placement cash value of 11.8p per share, it's good to see a bit of "expectation value" in the closing price this week.

[hedgehog 100] 13/8/2016 16:52

Sorry about the confusion YB.

I should have initially used the term "GM" rather than "AGM", and then gone on to say that the GM concerned should be an AGM rather than an EGM, as the AGM is due in September anyway (it was held on 11th. September last year).
It clearly wouldn't make sense to convene two GMs close together if avoidable, incurring unnecessary expense.

21 days notice of the AGM is required.

[yogaboy] 12/8/2016 02:07

Hi HedgehogWe might be at cross purposes. I got the implication from your post that you thought completion required an AGM rather than a GM of shareholders - but if the AGM is imminent then that would indeed be the ideal opportunity to satisfy the first condition. I think you're reading too much into the plural "resolutions" as the condition goes on to mention only the allotment and issue of the shares, and not a related acquisition / RTO deal. There must, of course, be one on the way - otherwise why have the issue? - and the investors won't move without the Prospectus in the second condition anyway. All will be made clear very soon, I think.

[hedgehog 100] 11/8/2016 18:02

"Completion of the Subscriptions is conditional upon:
-- evidence satisfactory to the investors as to the passage of resolutions at a general meeting of the Company to authorise the allotment and issue of the Subscription Shares;
-- evidence satisfactory to the investors of a prospectus relating to the issue of the Subscription Shares having been approved by the FCA; and
-- aggregate subscription monies being received by of not less than GBP2,477,666.70 (such sum having been deposited prior to exchange of the subscription agreements)."


YB,

But what about the above conditions?

Completion of the placing is subject to resolutions (plural) being passed at a general meeting: which is this case should mean the annual general meeting since it is due in September anyway.

Issuing the placing shares can account for one resolution, but there is at least one other resolution that needs to be passed also.