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.
FastForward Innovations – now Seed Innovations (SEED) – was a recommendation last year on the N50 website which also features writers here Tom Winnifrith and Steve Moore. That was at a 6.2p offer price, noting the discount to NAV looked severe and looking for operational progress and increased interest particularly in the health area to propel NAV forward again. Little more than two months later the shares had already reached 12p to sell despite the company then stating “it is naturally a more challenging market for fundraising, which could delay the roll-out of future growth plans”. We banked gains, but there has been operational progress, though the shares are currently available at an 8.4p offer price.
This AIM-listed company seeks to make investments in disruptive growth opportunities that would normally be inaccessible to private investors, with a significant focus on investing within the medical cannabis, health and wellness space. It recently announced results for its year ended 31st March 2021 which included £1.2 million disposals inflow, cash of £1.7 million, total liabilities of £0.1 million and “financial assets” of £23.3 million. The net assets of £24.9 million equating to 11.72p per share, up from a prior year 8.82p. We understand the NAV today is a share higher.
The results noted investments comprising Canadian Securities Exchange-traded Yooma Wellness (c. 12.97% of NAV), a marketer and distributor of cannabinoid and hemp-derived wellness products, NASDAQ-listed Portage Biotech (c. 5.57% of NAV), which is combining its own technology with already proven immune-boosting PD1 agents and has a pipeline of products targeted for clinical testing this year and ASX-listed Little Green Pharma (c. 3.33% of NAV), a vertically integrated medicinal cannabis business.
There’s then “exploring options for a UK listing” Fralis (trading as Leap Gaming, c. 37.78% of NAV) – a developer and provider of 3D gaming technology and products with a focus on virtual sports and virtual casino, “announced their intention to float on the London Stock Exchange” South West Brands (c. 1.01% of NAV) – a UK CBD brand business, which is looking to launch several new celebrity-endorsed products in the coming months and letter of intent for reverse takeover onto the London Stock Exchange CiiTECH (post period-end £0.175 million investment) – cannabis research and the commercialisation of cannabis products.
Anti-aging therapeutics development company Juvenescence (c. 9.23% of NAV) is described as another “pre-liquidity investment” – we gather this Jim Mellon backed company will IPO this year. Described as “longer term investments” are medical cannabis cultivator Northern Leaf (c. 2.41% of NAV), student finance technology company Vemo Education (c. 0.86% of NAV) and German-based vertically integrated medical cannabis company Eurox (post period-end €3 million investment).
The results statement emphasised “with a robust cash position and having accomplished excellent NAV progression, we are well placed to deliver significant long-term value to shareholders”. There are clear risks – demonstrated, for example, by that one investment Factom (c. 0.00% of NAV) “continues to investigate offers for its intellectual property, however, the company does not expect any meaningful return”. However, there is a diversified portfolio focused on growth areas and clear catalysts in particularly the noted likely upcoming IPOs – a Leap Gaming listing, for example, is considered by some to have potential for the company’s stake to be priced at around the current £17.5 million market cap here. That would leave everything else in for free!
As such, at an 8.4p offer price and at up to 8.75p, targeting a return to 11.75p to sell as the IPO’s of Fralis and Juvenescence within the next few months prompt a material uplift in NAV and a re-rate as well, BUY.