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By Tom Winnifrith | Monday 15 January 2018
Disclosure: I own shares in one or more of the stocks mentioned. 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.
Andrew Monk's VSA floated AIQ on the Standard List last week. Its shares soared 1000% and were suspended. As Andrew notes, through the passive investment vehicle RRR I own shares in AIQ (about £10 worth - CORRECTION I am told it is £1841 worth!). I will try to sell the lot as the valuation is insane. But Monk wants to defend his corner so before our writers really go to town - and I am on their side - here is Monkey in his private email to clients today...
Well I have to mention AIQ this morning as there has been so much press and blogging on it also of course I know exactly what is happening and the truth whereas what I read is a mixture of the truth and just rubbish - but that is what makes a market and its a free world so people can say what they want
The good news is share certificates are arriving - here is one of mine and theoretically this one alone is worth £10/- on paper !!! yeeee hi !!!...........but its not real yet ........and the bloody stock is suspended just as everyone gets stock and wants a market to deal in - but maybe I can do an off market trade - an unintended consequence of the FCA rule - forcing underground activity.
Anyway just a few points I want to make which are factually correct.
Firstly this is no scam - the shell was set up totally correctly and the money is there . This was a totally professional IPO - Its just the stock rocketed afterwards which caught everyone out including ourselves and I've been honest it is absurd but its no more absurd than Bitcoin or the Dot Com Boom all of which are also legal
TW Note The Jury is out. Wait for what the ShareProphets team serves up over the next hours and days :)
Secondly do bear in mind that shells in Asia are worth $50mn and so that may explain the excitement - there is a sort of arbitrage
TW Comment - shells in Asia may be valued at $50 million but they are not worth it. If listing costs in Asia are $500,000 only a total nutter would pay $50 million. This is a sign of bull market insanity, surely Mr Monk means "valued in the current bonkers climate2 not "worth".
Thirdly all the investors have made money - so why are people upset ? You want to lose money ? Even the Mighty Sheriff of Aim has made money from it as he owns stock.
TW Note. I have not made money since I have not sold or indeed received a certificate. I would hate folks to think that I applied for stock, I did not. I was allocated shares as I own shares in a vehicle called RRR.
Fourthly -The market makers did have stock - just clearly not enough but its always tricky for a market maker to know how much stock to take and probably as a general rule they take less from VSA IPO's than other bigger brokers , but our IPO's go up whereas many other s just go down - Numis and Mirriad as an example .........morale of story there is simple , back VSA as we do actually know what we are doing and have been around long enough to know
So what was the real issue ?
The real issue is the bloody RDR review which just screwed up small cap and retail investors - the exact opposite of what it was trying to do to protect retail investors - it really is time the FCA reviewed this and made some alterations to create a better market place and a fairer one which would also help the UK Economy
They want liquidity in IPO's - well that is created by retail investors but they then say that retail investors cant talk and deal with Institutional investment banks and they shouldn't be dealing in small cap anyway - which is stupid as retail love small cap and love IPO's .......think of BT and British Gas .........it was so easy in the past - retail could apply direct and get a renounceable share certificate they could sell immediately - if it was like that today this issue wouldn't have occurred.
Also they have made setting up an account for retail so difficult - I actually offered a Market Maker 100,000 shares in AIQ but in certificate form - He came back and said although he wanted and it would sort things out he couldn't take a certificate nor deal with me as I am retail despite also being a CF3 - Regulation Madness !!
Now RDR also forced many institutions and PCB's from even dealing in small cap which is just crazy as the economy needs their support and that is what market s are for - funding growth companies , but if these funds that used to play in small cap could be brought back then there would be far more liquidity and these issues wouldn't occur .....so I'm afraid really the regulator only has himself to blame
Now regulation is important don't get me wrong and of course I totally respect it and in general it has improved things - but sometimes what looks good theoretically just isn't practical and also needs reviewing . I'm sure prohibition seemed like a great idea at the time but it didn't work and so it was lifted - its time the RDR is reviewed and parts lifted
Anyway enough as I need to go dematerialise these shares and find all my other allocations in my SIPP's and then find someone who can trade off market with me unless the suspension is lifted first
By the way a lot of you also have shares as you have been E mailing me all weekend - my advice follow me but hopefully I get there first ! Actually of course I have to get my compliance officers permission and can only deal if I have no inside information so I have to make sure of that too , but right now I don't......where is my bloody compliance officer - never bloody in at 7:30 am !!!..........I'm just trying to help !!!!!!
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