Suggestions for a speculative punt?

adindas

Prediction is correct. The inflation in the US peaked in March @8.5%. Wed May, 11.2022, the CPI figure is lower @8.3%. But the stock market is still tanking today because the core inflation which include food is higher than expected rising 6.2%. Core inflation like food will effect more people than other items.

https://www.marketwatch.com/story/u-s-inflation-rate-slows-to-8-3-cpi-finds-after-hitting-40-year-high-11652272713

https://www.cnbc.com/2022/05/11/cpi-april-2022.html

Thrugelmir

BrockStoker said:

Bottom in sight/reached perhaps?

Nah. Retail investors are still buying the dips. Many have no previous experience of catching falling knives. 

adindas

Thrugelmir said:

BrockStoker said:

Bottom in sight/reached perhaps?

Nah. Retail investors are still buying the dips. Many have no previous experience of catching falling knives. 

Just imagine those who threw lump-sum £100k+ in either day during November 2021 to March 2022 especially in tech high growth stocks or fund containing a large number of high growth stocks. What happen with their money now, going down 50%-70% ??

There are already statistical data analytical data and opinion from experts presented in this forum that during the BEAR MARKET (not bull market) people will do better with DCA rather than throwing lump sum.

It does not need a professor in Probability & Statistics (maths) or financial mathematics, just common sense is enough to see that in general the people will have a better chance to get a better result with DCA in "THE BEAR MARKET!" (again not bull) than throwing lump-sum. In the bear market the individual stocks, funds, index falls more than it rises.

Some knowledgeable people Hedge Fund managers, acute traders are even doing more extreme by holding a large amount of cash.

It is true that in the long run if you are looking into 15yr+ it does not really matter as if you invest in high quality investment, diversified funds or indices these assets have always gone up in the long run. But if you could improve the result using why not ?? Also some people do not have that much time over 15yr+ to ride the market.

BrockStoker

My one worry right now is: Are the current market conditions in danger of pushing many small/fast growing companies, which would otherwise go on to thrive, toward bankruptcy?

I don't see how this can continue much longer without killing off the prospects of a whole generation of up-coming companies. Most of what is going on right now seems like a self-fulfilling prophecy: Investors frightened that the FED is pulling the rug from under them (no more safety net), but investors are pulling the rug out from under themselves by pulling out of the market.

All of that said, the most confusing thing right now is the price targets analysts are coming out with. Either they are living in cloud cuckoo land, or we are not borrowing enough money to invest right now. For example, AMRS (closed @ $1.72 today) got updated targets yesterday from:

Oppenheimer: Price Target $22
HC Wainwright: Price Target $22
Cowen: Price Target $13

Thrugelmir

BrockStoker said:

My one worry right now is: Are the current market conditions in danger of pushing many small/fast growing companies, which would otherwise go on to thrive, toward bankruptcy?

Are you referring in particular to US smaller companies with a listing on the Nasdaq?  Rather the broader picture which includes private companies. 

adindas

BrockStoker said:

My one worry right now is: Are the current market conditions in danger of pushing many small/fast growing companies, which would otherwise go on to thrive, toward bankruptcy?

I don't see how this can continue much longer without killing off the prospects of a whole generation of up-coming companies. Most of what is going on right now seems like a self-fulfilling prophecy: Investors frightened that the FED is pulling the rug from under them (no more safety net), but investors are pulling the rug out from under themselves by pulling out of the market.

All of that said, the most confusing thing right now is the price targets analysts are coming out with. Either they are living in cloud cuckoo land, or we are not borrowing enough money to invest right now. For example, AMRS (closed @ $1.72 today) got updated targets yesterday from:

Oppenheimer: Price Target $22
HC Wainwright: Price Target $22
Cowen: Price Target $13

Like suggestion from Peter Lynch on the videos that I posted previously. In this current environment, e.g.. High inflation leading to higher interest rate, a lot FUD,  looking into their debt level is one of the most important thing to look at. Some experts also suggest to look at their free cash flow that they have  generated.

But if their debt level is very high; in the high interest rate environment they will be struggling to pay their debt. Also high interest rate will bring down their valuation. As pointed put by Peter Lynch good companies with constant steam of revenue, very little to no debt are very difficult to go bankrupt.

Have you looked the debt level of AMRS. You could look for instance the D/E ratio, Current Ratio, Free cash flow  to equity ratio?

Good quality high growth stocks have high chance to survive. But the problem is if their debt level is uncontrollable, in the environment like this they might not survive. To prevent, to stay afloat they might do something adverse to shareholder values such as share offering, share dilution, or acquire more debt at higher interest. In addition to that for penny stock with the price of less than or close to $1 they might do a reverse split to prevent getting de-listed in NASDAQ.

Also do not forget, high growth stocks are high risk but also high reward. It is not uncommon they will rise 70%+ in less than three months. Some especially biotech companies could rise 200%+ (I have posted example before) in one day if there i a strong catalyst.

BrockStoker

Thrugelmir said:

BrockStoker said:

My one worry right now is: Are the current market conditions in danger of pushing many small/fast growing companies, which would otherwise go on to thrive, toward bankruptcy?

Are you referring in particular to US smaller companies with a listing on the Nasdaq?  Rather the broader picture which includes private companies. 

Well it's small to mid-caps on the NASDAQ which make up the bulk of my individual share holdings, so that is the area which concerns me most, but I'm also curious as to how the ripples will affect other markets - probably limited impact I suspect. I'm not overly worried, but my individual share holdings have become quite substantial now, so I remain on alert and will proceed with caution from here, not wanting to have any "nee-jerk" reactions.

BrockStoker

adindas said:

BrockStoker said:

My one worry right now is: Are the current market conditions in danger of pushing many small/fast growing companies, which would otherwise go on to thrive, toward bankruptcy?

I don't see how this can continue much longer without killing off the prospects of a whole generation of up-coming companies. Most of what is going on right now seems like a self-fulfilling prophecy: Investors frightened that the FED is pulling the rug from under them (no more safety net), but investors are pulling the rug out from under themselves by pulling out of the market.

All of that said, the most confusing thing right now is the price targets analysts are coming out with. Either they are living in cloud cuckoo land, or we are not borrowing enough money to invest right now. For example, AMRS (closed @ $1.72 today) got updated targets yesterday from:

Oppenheimer: Price Target $22
HC Wainwright: Price Target $22
Cowen: Price Target $13

Like suggestion from Peter Lynch on the videos that I posted previously. In this current environment, e.g.. High inflation leading to higher interest rate, a lot FUD,  looking into their debt level is one of the most important thing to look at. Some experts also suggest to look at their free cash flow that they have  generated.

But if their debt level is very high; in the high interest rate environment they will be struggling to pay their debt. Also high interest rate will bring down their valuation. As pointed put by Peter Lynch good companies with constant steam of revenue, very little to no debt are very difficult to go bankrupt.

Have you looked the debt level of AMRS. You could look for instance the D/E ratio, Current Ratio, Free cash flow  to equity ratio?

Good quality high growth stocks have high chance to survive. But the problem is if their debt level is uncontrollable, in the environment like this they might not survive. To prevent, to stay afloat they might do something adverse to shareholder values such as share offering, share dilution, or acquire more debt at higher interest. In addition to that for penny stock with the price of less than or close to $1 they might do a reverse split to prevent getting de-listed in NASDAQ.

Also do not forget, high growth stocks are high risk but also high reward. It is not uncommon they will rise 70%+ in less than three months. Some especially biotech companies could rise 200%+ (I have posted example before) in one day if there i a strong catalyst.

Yes - Amyris's debt is not at a very high level. The high cash burn rate in the last quarter appears to be what put many investors off and caused the sell off over the last few days. The nice thing is they secured some finance a few months back. Lots of expenses with the new plant going on line/new acquisitions/building existing brands, so much of that cash raise has already been burnt through, but IMHO, that sets them up to rake in big profits from here on in.

Looks like the market is recognizing that today, with a big rally!

Edit to add - this post from In The Ruff Research sums up Amyri's situation very well:

1. The Margin forced Selling is liking gone or nearly done
2. Instituational 13D/G filings are coming out and there seems to be a larger indicator that institutions are increasing their ownershipin Amyris
3. At least 4 Analysts have published since the earnings call and all 4 have price targets that are between $9 and $22 per share
4. We are now past the most recent interest rate hike and there is very little "downside" expectations on a 75bps rate hike
5. Inflation, while still peaking, seems to be slowing down its growth and about to hit its peak.
6. The war issues have already been factored into the market.
7. VIX is more likely to go down next week which should improve the market for growth and small-caps (which AMRS is officially in both categories)
8. In terms of Recession risk, there is very little chance of a Recession this year (i.e., two quarters of negative GDP growth), and as for next year and 2024, if there were to be a recession, beauty care tends to do well in this environment (i.e., referred to as the "Lipstick Effect").
9. Amyris is growing its consumer revenues every single quarter
10. Amyris three plants (i.e., Barra Bonita and Reno/Sao Paolo facilities) are all coming online over the next three quarters and margins will only be improving.
11. We know that Amyris has multiple financing options ahead of itself: a potential deal with the sale of the Biossance brand or another brand, a potential deal involving the licensing of two ingredients, a collateralization or financing of its plants / receivables, a sale of its interests in one of its joint ventuers (e.g., NOVVI). Cash is NOT an issue despite popular misconception.
In all of this environment, my biggest fear is related to supply disruption (which will be cleared once Barra Bonita is more fully up and running in Q3)....outside of that, I am not losing any sleep on solvency or dilution for this company.
So ask yourself, what do you think about the prospects and was its recent fall justified.

BrockStoker

When I first invested in AMRS back in June 2020 it was a very speculative company (bought 1200 @ ~$4.25), and ended up selling those for a slight loss, but jumped back in with 1000 @ $2.88 p/s in October. The share price peaked mid-march of 2021 @ $23.42 (around 686% gain), and it's been mostly all down from there till a few days back.

Back in June 2020 Amyris had just one operational manufacturing facility, if memory serves, but more importantly they had not yet proved that they could scale the manufacturing process. Today the story is very different. They have shown that they can scale manufacturing and make it profitable. They also have three manufacturing facilities, with a forth being planned.

The main problems as far as investors have been concerned are CEO Melo over promising and under-delivering. The market has basically priced AMRS as if it was a company that is not expected to deliver anything, but that is not the case. The delivery will be a little longer, that's all - hardly justification of driving the price back to levels not seen since I first bought. The other thing that made investors freak out was the cash burn, and Melo spending despite cautious monetary policy being the "order of the day".

There are always multiple ways to look at things. The market viewed the above two "crimes" as bad for investors, and while I don't like delays, they are not the end of the world, and actually, Melo making acquisitions at a time like this may not be such a bad idea, providing of course financing isn't going to be a problem, and I don't think it will! I think Melo is a very smart and focused CEO, who has said on at least one occasion that his aim is to build significant long term share holder value (possibly at the expense of the short term). His Achilles heal has been his over optimistic predictions, but he appears to be reigning those in now.

Going back to financing, Amyris is in a stronger position than markets appreciate. It's business revolves around a platform that spits out valuable molecules at a high rate (up to 4 per year) - the goose which lays the golden eggs as it were. It can pick/choose which molecules to license/sell off or if it wants to keep them for itself to use in it's own brands. It has proved it can successfully grow brands, turning them into very profitable assets. As it can control almost the entire supply chain, shareholder profits are maximized. Strategic partnerships/deals can quickly raise cash when needed without sacrificing much, and Melo says one such deal is already in the pipeline and should generate over $200m in cash in the next quarter or two.

So I think Amyris is actually in a very strong position going forward, and looks set to spearhead the synthetic biology revolution. Sustainability is rapidly becoming more important if we are going to survive as a species, and Amyris has part of the solution. The other day institutional investments in AMRS were at their highest ever level, 73%, after the massive rout, which got rid of many weak hands. Institutional investors include The Gates Foundation and John Doerr (also on the BOD).

One long term investor named Nadeem on the YHF message board for AMRS who always talks good sense recently had this to say:

"Over the weekend I thought a lot about "Why am I still invested in AMRS and is it worth the wait?" I came back with two solid reasons for my investment in this company: John Doerr and AMRS platform. Let me elaborate on both:
1) John Doerr: This billionaire is legendary, he was one of the initial investors in Google, when no body thought Internet would be this big and let alone Searching on the Internet will be a Billion dollar industry. He was on the board of Google, and literally mentored Sergey and Larry google co-founders into a successful business. He has repeated successes with Intel, Amazon and many more. Now his latest focus is on ESG and AMRS just so happens to be in his wheelhouse. Now he is not just throwing some money and watching from the sidelines, he actually quit other company boards (Amazon), to be more focused on AMRS board and few other companies. He installed John Melo to bring to light his vision, which is sustainability along with making money for him. Would he really let loose on 30% ownership of the company or would he protect and grow it? For him it's not just about making money but also on a mission to achieve ESG goals, no matter the price of it. Billionaires generally like to make a name for themselves and leave a legacy behind.
2) AMRS Platform: I know there were many discussions about if selling Biossance is a good idea or not. I think it's worth doing it, in fact that may have been the plan all along. The goal of Biossance is to enable the Beauty industry with Clean tech, I think Biossance already did a good job of that. It created awareness of Squalene and other clean ingredients so much that the competitors are also forced to use those ingredients, hence increasing the market for it and benefiting AMRS. The financial aspect of it also makes sense, it proves to the market that AMRS is in fact is the Golden Goose that can keep laying Golden Eggs that can grow into pretty darn huge eggs and can be sold individually.
So I am all for selling Biossance, the only caveat is Melo's timing is never perfect, he did grow Biossance into a Billion dollar business. However what may have been offered for Biossance 3 months back, may not be the same offer now. Macro economics have changed a lot recently. Every company is now in Cash preservation mode, so the initial offers can be re-negotiated, and AMRS does not exactly have a upper hand at the table. I am however a little hopeful about the $250 Million molecule monetization, that proves again how AMRS platform can be monetized as needed. Either sell established molecules or sell established brands, so they get the cash to re-invest in the Golden Goose their platform to churn out more. At this point the cash is better spent on increasing capacity in their plants. So looking forward to some first class execution on Bara Bonita and financial deals to clear the way..... Until then we just do what we always do, Hope and Hold!"

I think it might just be one of the best opportunities in the history of this thread. How many other companies in completely new industries have been mentioned? While it does still qualify as speculative, AMRS is now close to the inflection point where it either proves to the market it can go cash positive, or not. The next two quarters are crucial and we will see one way or the other.

I currently have 17.5K of AMRS @ around $4.50 average per share. Given that Melo has a long term focus, and markets don't (?), I'm not going to expect a smooth ride from here, but this is one stock which could easily go ballistic, as Friday's trading session demonstrated - +38% @ 3x average volume on a moderately green market day. I believe that was a clear change in sentiment, and AMRS has seen the bottom.

HSBC recently gave AMRS a $9 PT and said:

"Feeling the burn: Amyris is the clear product leader in synbio and clean beauty. The platform works beyond doubt, it can manufacture products at commercial scale, it can build brands and scale them too."

Thrugelmir

BrockStoker said:

Thrugelmir said:

BrockStoker said:

My one worry right now is: Are the current market conditions in danger of pushing many small/fast growing companies, which would otherwise go on to thrive, toward bankruptcy?

Are you referring in particular to US smaller companies with a listing on the Nasdaq?  Rather the broader picture which includes private companies. 

Well it's small to mid-caps on the NASDAQ which make up the bulk of my individual share holdings, so that is the area which concerns me most, but I'm also curious as to how the ripples will affect other markets - probably limited impact I suspect. I'm not overly worried, but my individual share holdings have become quite substantial now, so I remain on alert and will proceed with caution from here, not wanting to have any "nee-jerk" reactions.

Like the end of the Dot Com era. Focus will return to companies that actually making a profit. Or will do so in a relatively short period of time. Rapidly rising US interest rates will result in a guaranteed no risk return being available. Depressing the share prices of companies where profitability is currently a distant dream. Investors are again going to demand a sizable premium to invest speculatively. The only people that have benefitted from some of the listings are the management team, their private equity backers and the investment banks. 

As an aside. There's been comment that Musk's approach to Twitter is simply a smokescreen to liquidate some Tesla shares why the going is good. Would be typical of the cynical attitude that prevails in the US Corporate world.