By HotStockRockets | Wednesday 6 July 2016
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.
Optibiotix (OPTI) has this week served up news which should help make we shareholders richer in the medium term. But it is NOT the news punters wanted and the shares trade at 79p-80p.
The announcement is of a "strategy update". Essentially it talks of its achievements: fully funded, 45 patents, 7 trademarks, etc etc. But what it goes on to say is that its:
Optiscreen®, OptiBiotix®, SlimBiome® and SkinBiotix® technology platforms are now reaching a stage of development where it is advantageous to form separate divisions, each containing its own technology platform, IP portfolio and partner agreements. These divisions could in due course become separate legal entities with the potential for a separate public listing. The directors believe that shareholder value could be maximised by adopting such a strategy whereby existing shareholders could, in the event of a successful flotation, ultimately hold shares directly in OptiBiotix and one or more of its underlying divisions.
Such spin-offs can create shareholder value. we can see how they could reward holders and we gather that work on one such transaction is advanced.But in a sense it is also financial engineering.
What investors want to see and what will really drive value creation are deals announced that show Optibiotix monetizing its IP and generating meaningful revenues. We do expect some deals soon and it is they, rather than a strategy update that will make holders rich.
At up to 80p the shares a buy with a target to sell of 100p plus by the end of the summer.
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