Tom Winnifrith Bearcast: The placed Neil Woodford "scoop" in the Sunday Times - read through the spin, it could be endgame by July 1
Sunday Long Reads: Liverpool's Data Success, Con who didn't die, Fake Meat, Brexit Party, Sewage Viruses
Bears often pigeonhole duff companies as frauds, fads or failures as if they belong in one or other of these distinct categories. The truth is that quite often a fad resorts to fraud when it realises that it is a failure. The most obvious example of this right now is Tesla. But there are others.
Purecircle (PURE), the jam-tomorrow sugar substitute shambles about which I have written in the past is a difficult stock to trade. The share price seems to do nothing for ages and then move violently for no obvious reason in a very short space of time. Late in August it lost 25% of its value, from 400p-300p, in three straight trading days. Since then it has rallied to 375p after publishing dire results for the year to June 2018.
One of my few vices in life is sugar. I have parlayed this into stock selection via a recommendation on Tate & Lyle (TATE), which I last wrote up HERE. The company held a capital markets day late last week and the one presentation slide that stood out was one which talked about 'sugar replacement is a key market opportunity globally'. Well of course it is. Gluttons like me want to both have our cake and eat it and one way to do this - without becoming significantly obese - is to focus on non conventional sugar options, a market which Tate & Lyle has been active in with its Sucralose product.
Purecircle (PURE), the purveyor of stevia products (plant based sugar substitutes) warned on January 5th that first half results for the six months to 31 Dec 2016 were likely to crash into a loss from last years $5 million profit.
It may surprise you but I have not had an alcoholic drink all week. I have just been too tired to hit the ouzo which will please my GP greatly. It is skimmed milk for me. But last night as I wandered to the kiosk to buy that milk I noticed something else in the fridge: Green Cola. It turns out this is like Cola light but uses Stevia as its sugar substitute. I do not know if this is Purecircle's (PURE) stevia as there are many folks in this game but I thought it was worth a taste test anyway.
I have never been a fan of Purecircle (PURE), particularly in 2012/13 when its shares rose six-fold from £1 to £6 on hugely overblown dreams of the potential of its plant based sweetener product to replace sugar and cure America of its obesity problem.
Last year Purecircle (PURE) earned $4 million. Since then it has lost its finance director, its chief operating officer, its broker and its auditor. There has also been no shortage of insider selling. Its market capitalization? £555 million. Welcome to the whacky world of Purecircle, purveyors of stevia, a plant-based sugar substitute.
Readers may recall that my nap bear for 2014 was Purecircle (PURE), the natural sweetener company, at 610p. It ended the year at 510p and was also my main bear tip for 2015. It finished last year at 410p for a 33% decline in two years. Not bad but nothing spectacular.
I last wrote about Purecircle (PURE) in March and predicted that 2014 would be the year for the big collapse. I was wrong: the permascam that is Purecircle has remained rock solid while all around it our favourite bear trades have borne fruit. Indeed, for the price of Purecircle (£940 million) you could now buy Quindell. Gulf Keystone Petroleum, and Globo combined and still have change left for Iofina.
In the last two years my seven most covered bear selections have been: Gulf Keystone (GKP), Iofina (IOF), Cupid (CUP), Quindell (QPP), Globo (GBO) Avanti(AVN) and Purecircle (PURE). With the exception of Purecircle, the other six are all firm retail favourites and I often wonder what it is that draws the private punter like a flame-bound moth to such eminently shortable stocks. One can highlight various useful themes but all seem to throw up exceptions – modestly I point oiut these have all bar one (so far) been great short calls by my good self.
Investors of all types often fall into trap of the following mistaken logic: Thing A is going to be huge. Company B is involved in Thing A, therefore the shares of Company B are a buy. Hence with Tanfield (LSE:TAN) – at 15p worth £20 million, a former stock market darling: Electric vehicles are the thing of the future. Tanfield make electric vehicles. Etc. I warned recently about Tanfield and note that it admitted last week that its investment in Smiths Electric vehicles is probably worthless. It happens all the time. But it’s fun while it lasts.
Back in November I suggested that the share price of Purecircle (PURE) might be ready to unravel, citing mainly its whopping inventory levels and its inability to generate cash or profits from a story (natural stevia-based sweeteners) that was beginning to get a bit long in the tooth. Then the shares were 420p.
The share tips of the year for 2014 from HotStockRockets is delayed until tomorrow – instead, the Bard of the Boleyn, infamous short seller Lucian Miers has returned from Scotland and has revealed exclusively to his Nifty Fifty colleague Tom Winnifrith his FIVE tips of the year to short, to sell as he predicts disaster ahead. Number 1 is Purecircle (PURE).
I have taken Quindell Portfolio (QPP) off my “accident waiting to happen” list as it is now in the slow motion car crash category after a set of prelims that contained some very strange items, followed by two obfuscatory “clarification” statements.
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