Welcome to Trading Keys, which aims in a nutshell to give you the key information that actually will affect a companies share price, particularly short term.
It’s different and comprises information which isn’t provided elsewhere. If you’re not already on the list, please subscribe below.
For those who are new, every nutshell consists of eight parts and here is an explanation of each:
Cash invested / market capitalisation / management effectiveness - From an equity investor's point of view, market capitalisation and thus price per share is much more important than the internal financials of the company. If the company is losing money, but the market capitalisation is greater than the sums invested, investors overall are making money. Vice versa, if the company is making money, but the market capitalisation is lower than the sums invested, investors overall are losing money. It's the market capitalisation which management is capable of delivering that actually matters. Effectiveness is how much the management has made or lost for investors overall with the sums of money placed by investors under their control (and also provides a guide to what you should or should not be investing in - trading short-term of course is an entirely different matter).
Social media enthusiasm - Message boards are important not so much for the quality of their posts (which generally is low), but rather because so many other investors base their decisions on what the majority are saying there. They can trigger many buys and sells. But watch out, the more evangelical and / or hysterical it feels, the more likely it is that the share price is heading for a crash.
Upcoming events - These are absolutely key. They are what will drive short term share price movement.
Fully funded for upcoming events - Whether the companies are financed is equally important. If not, finance will need to be raised, which is usually via a discounted placing, or even more more disadvantageously for shareholders, via instruments such as convertible bonds.
Dilutive finance (a.k.a. death spiral finance) - Consists of convertible bonds or similar instruments which convert at a discount to the company's prevailing share price. They can be highly destructive and often virtually terminal for the value of investors' shareholdings. As a general rule, companies with dilutive finance in place are best avoided.
Management / brokers reputation - This is important due to how abusive future fund raises will be to the existing investors when they need money, which tends to be constant.
Placing likely short term - Important since this invariably will have a negative effect, at least short term, on the share price. Placings are not only for capital expenditure; very often they are just to pay the salaries and administration expenses. The cash burn rates of these companies need to be carefully monitored.
Undisclosed P.R. - For example, paying commentators to issue presumed independent opinions and reports, engaging shills to post positively on message boards, supposedly independent interviews with questions prearranged and the company having the right to edit. N.B. Most of the smaller London quoted companies do this (although it's not allowed in the US and many other countries), so it's really a question of how much they are doing. We give an indication of that. It’s bad for new shareholders who are often buying on a pump (frequently before a placing), but can be beneficial for those already holding.
Here are a few examples:
IOG (IOG)
Cash invested: £63 million
Market cap: £4 million
Management effectiveness: -94%
Social media enthusiasm: low
Upcoming events: capital restructuring
Fully funded for upcoming events: yes
Dilutive financing in place: no
Management / brokers reputation: low
Placing likely short term: possible
Undisclosed PR: currently minimal
UK Oil & Gas (UKOG)
Cash invested: £124 million
Market cap: £7 million
Management effectiveness: -94%
Social media enthusiasm: low
Upcoming events: Loxley-1 appraisal well
Fully funded for upcoming events: yes
Dilutive financing in place: yes
Management / brokers reputation: low
Placing likely short term: no
Undisclosed PR: currently minimal
Jersey Oil & Gas (JOG)
Cash invested: £113 million
Market cap: £66 million
Management effectiveness: -42%
Social media enthusiasm: middling
Upcoming events: Further Greater Buchan Area farm-out(s)
Fully funded for upcoming events: yes
Dilutive financing in place: no
Management / brokers reputation: middling
Placing likely short term: no
Undisclosed PR: currently minimal
We’re uploading many, many more of these (not just oil companies, all other sectors too). A small number are free; the rest are below the paywall. They are all being made available on Substack at the lowest price allowed (we will increase the price as the archive builds, but subscriptions taken out now will continue at the original price). There’s also an option providing you the opportunity to ask for companies you’re interested in to be covered immediately and updates to be prioritised. The nutshells provide you with the key trading information for these markets that you actually need.