Neill Ricketts, CEO of Versarien (VRS), the graphene company which is currently the number one pin-up stock on AIM, can be forgiven for thinking that he can walk on water. In October 2011 he paid £4,000 for a 40% stake in Versarien Technologies, a start up venture. The very next month he raised cash from his mates at 125 times the price at which he had invested, raising around £425,000 from them over the next eighteen months at prices up to 375 times his entry price (the accounts stated “the directors consider that all share issues took place at market value”). In 2013 the loss-making metals venture was acquired and floated via a reverse merger for a paper value of £6.5 million with Neill’s four grand stake worth a cool £2 million.
The rest, as they say, is history as the loss-making metals venture was put firmly on the back burner and the focus became graphene. Neill’s stake is now valued at £27 million, and that’s after net market sales of £775,000, not forgetting options worth £5.8 million and remuneration to date of £800,000. The icing on the cake for Neill is that everyone loves him. Apart from the bears like me he has made everyone money, and even I kind of love him for the sheer brazen chutzpah of it all. The 125 timers and even the 375 timers he ripped off before the float are happy because if they had chosen to exit at the float price they still made good money (those who held will now be ecstatic). Various institutions dabbled in the stock and exited with decent profits, handing over to the retail army who now own the company along with Neill and have seen the price go up, more or less in a straight line.
All budding stock promoters should take a leaf out of Neill’s book. He has accomplished the trick to perfection. He chose graphene, a business with unlimited potential for hype, and has, with unfailing energy, pumped it with his two chosen weapons; a constant twitter barrage and regular appearances on stock promote tv, principally interviews on Vox Markets with the vacuous Justin Waite ( aka Justin the Clown). This seems to work better than analysts buy notes, of which there has not been a single one. The red flags are, of course, ignored, as is understandable with everyone sitting pretty. The abrupt resignation of the auditor BDO shortly after the IPO, the resignations of the entire original board, the impressive NOMAD turnover (four in five years), the little omissions and inconsistencies in the story: all of these are tomorrow’s problem.
Sooner or later, however, the company will have to start producing the promised jam. As Cynical Bear pointed out the other day, encouraging results in a number of the tsunami of collaborations and trials announced to date were marked down as due within two months or “shortly” back in July, and sooner or later he will have to admit to the ones that have been quietly dropped. The last thing Neill needs is to disappoint the troops. Meanwhile I am happy to remain short and will return to Versarien in more detail in a couple of weeks after I have examined the pathetic response to Shadowfall’s excellent analysis of First Derivatives (FDP) by brokers Goodbody and Liberum. At £32, despite the fall, those shares are, in my opinion worth no more than £20 and that is being generous.
This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website - where there is a new tip THIS WEEK EVERY DAY and a new shorting piece from Lucian later in the week - click HERE
Filed under: Versarien, Patisserie Holdings, Sosandar, Charlie Wood, Mayan, Synectics, First Derivatives
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