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AIQ – open offer oversubscribed, still an outright SELL

By Nigel Somerville | Monday 11 June 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.

I called Standard Listed AIQ (AIQ) lower when it announced its Open Offer and the shares have (very roughly) halved, but there is plenty more to go. This morning it announced that the offer, at 20p, had been oversubscribed but remember that the net assets per share (all cash) are around 8-10p.

What is clear to me is that the disorderly market from when the company listed – and was suspended within days, reinstated, suspended again and then reinstated – seems not to have gone away. The company has made clear that its only assets are cash, and amount to 8-10p per share. Yet the shares are still 50p-60p (bid-offer).

What is also clear is that nobody, now, is trading the stock. Last week ADVFN recorded just two trades (for 8000 and 10,000 shares), and has recorded none so far for today. Given that the stock was suspended for a disorderly market, I would gently suggest that the market is still disorderly. Since no-one is selling, the stock is yet to obey the laws of gravity.

The hope had been that the open offer and placing would add enough liquidity to the stock to restore order to the market. It is clear that the placing, on its own, did not. So now we wait for the open offer shares to hit the market.

If I am right, the shares will collapse to around 10p – give or take – once the open offer stock hits the market. And that will show that the market was indeed disorderly ever since the shares were unsuspended for the second time, which would surely be a scandal.

If I am wrong, the shares will not collapse – but I would argue that the false market was simply continuing – a scandal in itself - and holders are risking yet another suspension.

But eventually the bubble will burst. Either way, the stock is a sell. These shares are only worth 10p at best. Even with Warren Buffett on steroids at the wheel, they would be a sell at 55p.

And then there is the admission document which was wrong, the myriad of stuff on the internet which was taken down after I exposed it. And there was the chairman of the company telling us all that the company knew of no reason for the rise in the share price.....less that one trading day (there was a weekend in between) before is was suspended for the second time - and we have had no statement from the company as to why.

So it is not just a sell, it is an out-and-out bargepole stock as well.

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