By Tom Winnifrith & Steve Moore | Friday 14 July 2017
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.
Shares in Fox Marble (FOX) fell by almost 10% to 8.25p-8.5p on the back of news that it had appointed Beaufort Securities, Belfort Secs to its legion of admirers, as the company's joint broker. The assumption is that Belfort, whose clients are mainly bucket shops, will be doing a discounted placing. that is not the case, Fox has enough cash to get it through to profitability but Belfort's reputation proceeds it. Fox has gone on the record to say there is no placing.
"Beaufort Securities will focus on improving liquidity and marketing the potential of Fox Marble to its network of UK retail and HNW investors, whilst in tandem providing research on the Company."
Hmmm. Belfort supplies research to a stack of private investors. Does that research move markets? We are less than 100% convinced of this. As such we are not convinced that this appointment is such a smart move.
Fox also states:
"Fox Marble has today issued 277,777 new ordinary shares of 1p each ("Ordinary Shares") in the Company to Beaufort Securities Limited at a deemed price of 9p per share, being the closing bid price on 11 July 2017, in lieu of annual broking fees."
In lieu means "instead of". This is not "instead of" FFS. This is the annual fee and it is c £25,000. This is not a cost free exercise, it will be paid by shareholders in the form of dilution. The £25,000 is a cost and should be charged against the P&L. And since these shares have cost Belfort nothing at all why do you expect it to hold them for more than a nano-second. There is no mention of a lock-in on these shares which might indicate that Belfort really believed in Fox and wished alignment. We would not be surprised if the shares had already been sold. We'd be startled if they were still on the Belfort books in a few months time.
It is all very well Fox making an appointment such as this which, history suggests, will add not a jot to shareholder value. But stating that black is white, telling a patent falsehood in an RNS is another matter. It is not a malicious lie to say that the shares are "in lieu of fees" rather than the shares "are the fees" but it is none the less a bit of an insult to the intelligence of we long suffering shareholders to say that black is white, to say something that is patently false.
The fundamental case for Fox is so strong that we view the Belfort sell off as unfair and retain our BUY stance but we do so through gritted teeth. Whichever PR fucktard consultancy insulted shareholders by drafting this should be the next cost saving and should be handed a termination notice forthwith.
This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve shortly and a new shorting piece from Lucian later today click HERE
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