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Optibiotix – are we buying or selling?

By Tom Winnifrith | Friday 8 May 2015

Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

I am asked by a couple of readers whether RMPC is buying more Optibiotix (OPTI) or selling as the shares have fallen back to 31p from c40p. As we do not follow this as an official tip I just pen a couple of thoughts.

The answer in short is neither. We are not buying as we have a pretty enormous exposure. But we are certainly not selling either. For starters in a space that is “hot” I look at the piddly market cap of Optibiotix and compare it to, say, that of 4D Pharma, and think that the valuation is just ludicrously low.

Secondly, Optibiotix has already demonstrated that its technology works and can be commercialised. We know that it is talking to a raft of big names in world food about licensing deals and frankly it just needs to announce one such deal and the stock will be re-rated big time.

Nothing is a given in life but people we know who are close to Optibiotix expect a number of announcements in the very near term. The volumes that have seen the shares market back from their highs are pretty trivial and so on real hard news the re-rating could be equally rapid, if not more so.

Clearly there are risks in such an investment. It is not a classic value investment but for what it is worth we would not be even considering selling these shares when there is a 3 in front of them

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