Explosive: the Legal document showing how Frontera Resources defrauded investors for years & the chatroom morons threatening me with violence for exposing it. Read from Tom Winnifrith, The Sheriff of AIM, HERE
I called ITM Power (ITM) a speculative buy in August 2019 at 38p. Having hit some 358p last week, that’s just off that tipsters “crack open the bubbly stuff” target of a 10 bagger tip! The company provided up a trading update on Monday – nothing stated that surprised me, but I did wonder why the update was issued. Now we know the reason – clear the decks for shocking Director share sales...
This company is in a very hot sector – the very hottest in my view – Hydrogen. I have no doubt our future fuel mix will feature hydrogen as a core component. I have articulated this in prior commentary – I see road fuel and construction equipment fuel as moving towards Hydrogen and injection into piped domestic gas as routes to commercialisation. There is no question in my mind that ITM has presence and ability to scale into the markets opportunities and remains my favourite from a technology and development stage, but this is a small company in an infant market. Baby steps and perhaps the odd small leap is required and expected and I can see it delivering on this. However ITM’s closing market cap on Friday last week, was £1.66 billion, with the share price around 360p. That to me is one heck of a high valuation!
The company is loss making (£17.5 million “adjusted” EBITDA, which allows for grant income) and has cash of £41 million and sales revenue of £3 million. I will leave it to others who have far better accounting and maths skills than me to work out a discounted cash flow valuation on any reasonable forward business income multiplier basis that justifies that valuation. I will simply not bother. It’s not worth my time. And now director’s option exercise and massive sales, totalling some 4.7 million shares. This looks to me like some 60% of the day’s total share sales. I suggested back in February anyone who followed my buy advice in August 2019 (at 38p) de-risked at 140p. I also advised I would look to join the share register if the price dipped – it did not to the extent I required relative to the market, and it never did. I did not buy - my loss since then given the share price rise of over 100% since that slice call.
I look at the Hydrogen investment space. I see the likes of Powerhouse Energy (PHE) motoring on, despite my warnings over the last year. Evil Banksta highlighted once again the technical risk I noted last year. I cannot understand why the “market” cannot see the technical and commercial risk. Operating commercial projects are fact. Powerhouse has no commercial projects. Demonstration projects are just that, demonstrations of potential. I note Eqtec (EQT), a company Gary Newman commented on recently, continuing to maintain a market cap that I equally cannot see any justification for. I see Simec Atlantis Energy (SAE) moving up sharply despite the large number of red flags on finance and technical risk highlighted previously. I note Tom Winnifrith has commented often in recent weeks about how the “Covid-19” investment space is a bubble. I agree. But the alternative energy space is a far bigger bubble in my view. It’s not about the companies in this sector all being cr*p. Some are and some are not, but I can only conclude the sector valuations are total madness, regardless of Hydrogen and other alternative fuels being part of the future. With the Directors providing a clear lead, I can now only conclude that slicing at this level, if not selling in entirety, is the only rational conclusion.
Filed under: ITM Power, Frontera Resources, Johnson Matthey, Ariana, Gulf Marine Services
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