Rant: What is annoying about 99% of AIM companies.

I was going to snap this onto the end of the Rurelec update but I think it's important to acknowledge separately. 

Rant: what is annoying about a significant % of AIM companies.

So as shareholders we employ MD/CEO's/FD to undertake a specific role. That role should cover all elements that are required for the company to progress commercially. So why is it, you find companies paying consultancy fees to MD's/CEO/FD's and the like that should be incorporated within the role? I don't mean their overall fee arrangement and how its paid, but those additional payments. I mean the specific elements say for example, take a mining company, why should a consultancy payment be made to a CEO whose role should cover "mining finance, PR, and strategy/commercial optimisation." Its one thing I am looking at significantly, amazingly here's a thought for investors...

The fees charged (under G&A General and Administrative) expenses is far from proportional to the returns for shareholders. For me, when I see significant excess with little return I am now shorting these stocks...Yes I've so far shorted, VIY, RGM, RRR, NYO, PVCS, CYAN BLVN...the list is endless or very poor performances some because of the market conditions others because they were never in my opinion likely to return anything for shareholders long. 

The companies need to start being accountable for their wages and lack of return for shareholders; I base this on their share prices...why does a party deserve near $250K+ per annum for a company never returning anything for its shareholders...those stalwarts of "long only." Something I used to be but have significantly changed...I'm a negative trader now, looking for items the market doesn't appreciate or is clearly running out of cash...80% of my book is short. 

There's two Directors in particular whom I won't name at the moment, from a certain company that appear to have their 'nose' in the trough in so many ways, I'm amazed their cleaner can't claim a fee as well. It's one of the reasons I now monitor the alleged tips/recommends by many people to appraise the 'pump' or short to wait for a spike on nothing to short later...

I am now firmly engrained in companies with multimillion pound market caps above most of AIM, where their fundamentals don't add up...or do. Examples being, BT compared to SKY, the short on SKY was clear as anything. However, one chap paid vast amounts informed me I didn't know what I was talking about and hoped I got burnt. Going as far to inform me that my head was stuck up my arse…no one considered the challenges and increased cost per user to maintain them with SKY, nor did they consider that Sky is reliant on specific elements…how much will the Premier League Cost next time…analysts aren’t rating in the fear factor that Sky (LSE: BSY) will have to pay. They can’t afford to lose it..especially if Liberty come to the market perhaps taking ITV. Some say this may cause a monopoly, however I disagree...

So back to my rant, where there has been more than 3 targets missed on a company, name me a share price that hasn't halved? Of the ones I follow, short, long etc...there's not one. I'll give you a prime example of a company I have been significantly short on...actually two, just to get your brains thinking. 

Investegate RNS News thread for CYAN

Investegate RNS News thread for Vialogy

Look at the lack of returns, I raised this when options were awarded in Vialogy when it was significantly higher. Why would you buy, admittedly there are the one’s you’ll miss out on, such as Nighthawk’s turn around, however its better to miss one than be involved in 2 3 4 5 6…you get the idea.

Simple, if a company has never delivered, what’s the odds of it delivering? You can research and consider items but the facts are there…unless of course you like the taste of jam, tomorrow, the day after and next year.  

So you’re thinking of a good company? I can automatically name one…

Grant of Options to Iofina Directors 12/11/2013 they should be congratulated, admittedly I’ve sold most of my stock and barely hold any now, but I had been buying for a very long time…despite significant abuse and attempts to ramp the stock, I persisted. It’s the reason I don’t read the bulletin boards now…the commentary in my view is fairly disconnected from reality. 

Bulletin Boards invoke a fear or psychological element that doesn’t match the returns. Likewise paying for coverage of stocks, or live share prices? Why would you bother, your terminal should do it for you. Traders, Investors and the like should start demanding more. If you’re buying stock, get your broker to send you their coverage..you are after all paying a fee. If not move somewhere where you’re valued and coverage is guaranteed. There’s nothing up with paying for coverage if you returns are likely, however these stocks have peaks and troughs…Rant over. Apologies I try and keep this specific to certain International Arbitration Stocks, but I am what the market makes haha! 

As a final thought, for those investors out there…there aren’t many now. Why do you need live prices to look at to over focus? To pay someone else for despite no doubt paying them a trading fee as well? I have prices, I pay for it, but it’s my livelihood now, 90% of my income comes from the market. It doesn't make me better than someone working in an office or not wearing jeans 99% of the time bar the odd meeting! However, people have a perception they need all these boltons to make money often paying for prices, but watching their stock go up and down and doing nothing? Sound familiar? Well if it does consider whether its viable to even bother with it.

When in fact, most people trade to often, focus on one stock too much and as is evident by discussion with other parties. Not often make money. This doesn't mean the Tom Winnifriths and Dan Levi’s of this world aren’t valuable, their traditional approach to investing (my view) should make them more valuable to the retailer without the time to cover items as much as TW & DL do. No I'm not paid to state that, it's just something I have a view on. However, from a distance I have observed the abuse, the discontent and the like said about them. Would someone really call them that to their face? Just because you have a screen to rant at, doesn’t mean you can’t at least be polite. So for those without the manners, don't bother reading this board or any board. In fact go and learn some before you start insulting yourself more..

However here’s an equation for you…

When a company returns little for its shareholders and the board cost a lot…which way is the SP going. So if a party points this out, why get abusive? Perhaps your risk profile is “of the hope they do one day return money”, but the abuse… I am lucky, I have a fail safe, I don’t read the abuse now, Ian does, poor chap, he approves or not. Likewise, if there’s negative commentary it shall be published guaranteed only if it doesn't include abuse or personal insults…

As an additional thought, not related to the above:

Investors need to be more aware of where a company is in terms of 'commercial success' (returns from shareholders). Follow Inspirit Energy to get an idea of the movement in the SP. I would have shorted this had it been available as a short. The reasons being the company will need to sell significant amounts to actually gain a return for stock holders. Once you wrap in all the costs on top of producing...

When looking at the Micro-CHP (micro combined heat and power) and the feed in tariffs. I don't form a belief that CHP on a micro level will produce "20%" of the energy for the UK. The reliance on GAS has significant risks anyway...however I'm not going to have a debate about Energy. I merely want people to follow the stock. A) with the Equity Swap Agreement B) The requirements for funding, albeit I want people to consider its possible with http://www.help-link.co.uk/boilers whom offer finance, so does BG etc...If INSP start to offer affordable finance (perhaps via the The Green Deal financing mechanism) that doesn't eat into the cost of the boiler significantly and the feed in tariffs are reliable, then there could be a case. However the cash flow required doesn't stack up to me currently. Hence the valuation at just under £10M market cap (Shares 566.77m SP: 1.75p mid) in my opinion is over-rated based on future expectations alone. 

I always want people, to consider the impact of the Australian dollar depreciation, its my main FX trade. Look at the cost of gold and the likely impact on exports from Australia to China...

Have a good weekend, time for a children's party...