Figure 1 Midatech Pharma PLC : Eureka!

Source: Company Website

Midatech Pharma ( dual-listed AIM: MTPH, NASDAQ: MTP) focusses on immuno-oncology delivery technologies destined for the treatment of rare cancers. The UK-based research and development arm has three programs already in clinical trials. These ground-breaking proprietary technologies are ring-fenced with strong intellectual property rights and are each designed to deliver cancer treatments more effectively than the current market leaders in a multi-billion dollar sector. The Company’s advanced liver cancer treatment received Orphan Drug Designation earlier this year. Midatech also has a US Sales and Marketing operation  which was created from the acquisition of DARA Biosciences and a Trading Statement issued on July 25th reported for the first half of 2018 an expected increase over last year of 16% in Group gross revenue to £5.8 million. As recently as last month, the US subsidiary signed an agreement for the exclusive rights to promote another oncology treatment as part of its growing portfolio. Midatech has an eminent board of directors with an international pedigree in some of the largest known pharmaceutical companies, overseeing a management team who also have a track record of successfully delivering medical products through the clinical trial process. The share price has been falling away over the last two years but this may well change when the results of the first human trial are announced in late Q3/Q4 this year.

Tim Sohal Corporate Broking

Figure 2 Nucleus Financial Group plc: per arduam ad astram

Source: Company Analysis

Nucleus (NUC.L) is a wrap platform founded in 2006 to provide independent services (including custody, trading, payment, reporting, fee-handling, research and integration) to over 2,200 adviser users as at 30 June 2018. It is responsible for assets under administration (“AUA”) of £14.3bn on behalf of more than 90,000 customers. It listed at the end of July following in the footsteps of its larger cousin Integrafin (IHP.L), which floated as recently as March this year. These companies look to target an older, richer population. The amount of unconverted wealth of clients of IFAs is still very high, which offers the prospect for further growth. Nucleus has yet to emulate fully Integrafin’s completely internalised operations and still relies on more expensive outsourcing. Both IPOs went well on the back of the buzz in the sector: IHP floated at 196p and currently stands at 365p while NUC floated (with Daniel Stewart clients’ participating) at 183p and rose to an intra-day high of 240p before dipping back to the current 223p. Nucleus has a progressive dividend policy and is likely to go shopping within the sector.

Dhivyan Kandiah Investment Hub

Figure 3 DowDuPont Inc: getting together just to breakup! Profitably, of course!

Source: Google Stock Images

In a fortnight when Apple (AAPL) broke the one trillion dollar market cap level, another well-known US behemoth gave further details of a three-way split.  As the slightly clumsy DowDuPont (DWSP) moniker highlights, the company is itself a recent combination, formed last year after the dynamic Dow Chemical took over the underperforming DuPont.  The management of Dow Chemical for a number of years have been undertaking a strategy of improvement supported by an aggressive activist investor.  Now, however, it is time to get smaller rather than bigger.  Along with its second quarter performance announcement a couple of weeks ago, DowDuPont announced that in the months after Easter next year it would be split into its constituent chemical, speciality products and agriscience divisions. Such actions typically create value as the encouragement of sector divisional entrepreneurship, liberated from central management, is usually one of the more compelling themes out there. Bigger is not necessarily better!

www.dynamicopportunitiesfund.com has a holding in DowDuPont.

Chris Bailey Chief Investment Officer

Figure 4 LoopUp Group PLC: looking up

Source: IG/Steve Shelley

LoopUp (LOOP.L) has seen a fourfold increase in its share price since the IPO in 2016. The top graph in Figure 4 shows the shares are still benefitting from an upward-sloping support line upon which I have marked blue circles. However, Figure 4 also shows the Moving Averages (blue circle in the middle graph) in negative territory and the Relative Strength Index’s dipping briefly into over-sold territory (blue circle on bottom graph). Yesterday the Company released a very positive trading update with sales surging by 39% to £12m in H1 2018 compared to £8.7m GBP the previous year and gross margins holding up at 77.2%  vs. 76.8% last year. The company completed a £61.4m acquisition of MeetingZone in June on a debt-free & cash-free basis, funded by a £50m equity placement and a new £17m term loan, and the Trading Statement reported that the cost savings on integration are better than expected. LoopUp Group is a premium remote meetings company headquartered in London, with offices in San Francisco, New York, Boston, Hong Kong and Barbados. Yesterday shares rose 6.7% to 437.5p making the market cap £225M.

Steve Shelley Investment Hub

Figure 5 Emerging market currency weakness not going away anytime soon.

Source: CNBC

While holidays in Turkey are flying off the shelves because the cost of having a good time there has almost halved in price on account of the lira weakening vs the USD, you could be forgiven for thinking this is an isolated incident and all because of some spat over the repatriation of a Pastor.  Sadly, the issue is much more widespread; many other emerging/developing market economies are also beginning to feel the strain. India’s government has urged people not to panic today as the rupee slid to an all-time low vs the USD.  The currencies of Russia, Brazil, Argentine, South Africa and Mexico are all suffering.  So, what is the root cause of all this?  In 5 words…the dollar and the Fed. Emerging-market currencies are in the midst of another weakening trend vs USD. The origins of the current downturn are broadly like previous episodes, which is to say that is a combination of rising interest rates in the US, sluggish equity markets and global risk aversion which sees the USD as a safe haven.  Only the Swiss Franc is enjoying across the board strength.  What’s different now is that these factors may not dissipate as quickly as before.  The sensitivity of emerging-market currencies to higher US interest rates is striking. Every move upward in Interest rates triggers currency weakness among countries with large current-account deficits. So unless there’s a stock market crash or reversal of Fed policy, the pressure is likely to continue. Figure 5 shows the USD index vs a basket of currencies across the globe so far this year. Such trends never last for ever and there are plenty of potential offsetting factors but USD strength is unlikely to ease before emerging markets have suffered a little more.

Ben Stephens Head of DSFX

Figure 6 Football Crazy

Source: FT

Apparently, the Football Premier League season has kicked off again (did it ever stop?) and Miles Johnson, clearly an Arsenal fan, published Figure 6 in yesterday’s FT. In the past only fans and fools (entrepreneurs who made their pile in other sectors) used to buy shares in football clubs. In France it was a well-known sell signal when the boss of a listed company bought into a club and, of course, AC Milan was a very expensive indulgence for the vainglorious Silvio Berlusconi. Just as daft appeared to be the banks who lent money with very little certainty of repayment. All this is changing with the spread of on-line streaming. However, Figure 6 shows that Manchester United (MANU.NYSE) shares have not performed nearly as well as the team itself. Almost the opposite might be said (unkindly) of Arsenal while Turin’s Juventus (still backed by the Agnelli family) has starred both on stock market and playing field. It is important to keep one’s head as an investor rather than break one’s heart (and bank) as I suspect in football it is usually a case of ‘whoever has will be given more and they will have an abundance!’

Alastair Winter Chief Rugby Reporter

 

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By Alastair Winter

Cheif Economist at Daniel Stewart

alastair.winter@danielstewart.co.uk