Constant misinformation, questioning of strategy and panicked selling by investors are three of the reasons behind the recent share price declines of story stocks, ASOS (LSE: ASC) and Gulf Keystone Petroleum (LSE: GKP).
The bulletin boards are buzzing with information at present and over the past seven days alone, there have been over 700 messages posted on one well-known discussion forum about Gulf Keystone.
However, during this period the company’s outlook hasn’t really changed, although this hasn’t stopped the onslaught of messages.
That being said, during the period Sami Zouari joined the company as CFO, bringing a wealth of experience to the board, but his compensation package looks rather excessive. He was granted 1.5 million market-priced share options at an exercise price of 55p, equivalent to £825,000 vesting over several years.
A rough patch
Additionally, ASOS has been the subject of much discussion. But investors seem to have forgotten that the company has achieved explosive growth over the past few years. The company is currently trying to navigate through a rough patch but still has a strong reputation, healthy cash balance and management has ‘skin in the game’.
What’s more, ASOS’s sales increased by 15% in the six weeks to 9 January, with total UK sales growing 27% during the period. So, this is still a high growth business, but investors seem to be unable to draw their eyes away from the falling stock price.
In theory, you want the share price to fall. Can you imagine buying an entire business simply because the price of the business had been marked up substantially last week and the week before? And this all comes back to the fact that under every stock price, there is a real company, something that many AIM investors seem to forget.
It takes time
Unfortunately, Monitise (LSE: MONI) has started 2015 by disappointing its investors yet again.
However, there’s no reason to dump the company just yet. As announced at the beginning of this week, the company is up for sale and has received “a number of expressions of interest in a range of potential corporate transactions including a merger with a third party or a sale of the company”.
This statement was followed with a word of warning by management, “discussions are at a highly preliminary stage and there can be no certainty that any transaction will result.” It seems as if additional patience is required with Monitise. Remember, the company is in the middle of a strategic re-engineering and has a cash-rich balance sheet. So, the company has room to make things work.
EMED Mining (LSE: EMED) is another AIM listed small-cap that is slowly gaining traction. Developing a mine takes time and the company’s Rio Tinto Copper Project is no exception.
Quiet period
EMED is currently expecting its copper mine to start production during the third quarter of this year. All the important paper work has been finalized, and there are currently over 200 full-time employees together with numerous contractors working at the mine focussing mainly on plant and infrastructure refurbishment.
During the first two quarters of this year, EMED will continue with construction and repair activities that have been ongoing at the mine since last summer. Unless there are any significant developments, the next six months will be a quiet period for the company as it gets things up and running.