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By Nigel Somerville | Tuesday 22 May 2018
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.
Having made it back to the market after its second suspension (and it only listed in January!), Standard-listed AIQ (AIQ) has now launched the promised open offer at 20p. Meanwhile, the shares have been collapsing from the suspension price of 135p to just 55.5p last seen. So the open offer is a giveaway, right?
Er, no. Wrong. This is an investment company whose only asset is cash – which amounts to around 8-10p per share. At 55.5p, despite having more than halved since the suspension was lifted yesterday, it is still quite clearly overvalued by a country mile.
Both suspensions were caused by a disorderly market and (assuming this has finally been corrected now, although I don’t take that as a given) the stock should eventually drop down to somewhere around 8-10p – in line with its cash position.
Of course, one might want to apply a discount to the cash because there will still be boardroom salaries and plc costs to pay. And I daresay the placing and open offer will have cost a few quid too.
So I don’t consider the open offer to be a potential win: why would you pay 20p for 8-10p worth of (cash) assets? And if you apply for shares at 20p, how long will it take to offload them again? What will the share price be when you can sell the stock? You can bet your boots that it shouldn’t be anywhere near the current price.
On that basis, AIQ is still a standout sell…..not to mention all that has gone before which on its own is enough to have me reaching for my longest bargepole.
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