If you are looking for a small hint of what might happen next to the global Tech sector, consider the plight of Allied Minds. The share price for this once beloved, tech investor is in free fall with no obvious driver behind the recent (negative) price action.
Bizarrely, I had been growing more and more optimistic about the potential for a recovery in the share price of this UK listed, but US focused tech venture capitalist. A few months ago, I even suggested in my FT column that maybe the worst was over. In this blog, I’ve also flagged up what I perceive to be a valuation anomaly – where the share price is massively below the NAV and not that far off its (admittedly fast declining) net cash level.
Unfortunately, the share price below tells a very different story – and suggests I was hopelessly naïve! After some signs of stabilization around the 60p price level, Allied Minds share price has continued to plunge in value. The next barrier seems to be around the 50p level, at which point the business would be worth less than £120m or $150m, depending on your currency (and FX rate). There’s no obvious news flow powering the share price decline apart from the obvious, wider Tech market sell-off. In fact, only last week we heard that Spin Memory, a major bit of the portfolio, has announced a Series B fundraise at roughly the existing book value placed on the stake. The fundraising also coincided with the announcement of a deal with Arm and Applied Materials.
Looking at the smaller, lower portion of the chart below (from Sharepad), focused on volume, there doesn’t seem to be any obvious pick up in daily trading volumes, but my guess is that perhaps Woodford is selling down small holdings of the stock which would obviously prove something of a headwind. I am tempted to say that I would be a buyer, again, if the share price did droop below 50p but this looks like a classic value trap, with the market trying to tell us that something is terribly wrong at the IP based investor.