FNArena’s Weekly Insights – September 05 2022
In this week’s Weekly Insights:
-August Reports: Closing Remarks
-Conviction Calls
-Research To Download
By Rudi Filapek-Vandyck, Editor
August Reports: Closing Remarks
The key attraction for investing in small and micro cap companies is the ability to generate oversized gains when things fall into place at the right time.
But just about every reporting season shows the opposite holds equally true and this time around the true stinkers from the August reporting season are called PPK Group ((PPK)), Redbubble ((RBL)) and Appen ((APX)).
In particular the erosion in the share price of “innovative technology investor” PPK Group looks genuinely gut-wrenching since the share price peaked above $21 in July last year. In August, the stock lost an additional -40%, pulling it closer to $1.52.
The thesis that when market dynamics toughen up, smaller cap stocks become relatively more vulnerable doesn’t need such extreme examples to prove its validity. One look into the finer details of the FNArena Corporate Results Monitor can be just as revealing, and affirmative.
At face value, the inclusion of 344 corporate results released in August has generated 30.8% better-than-forecast results while 26.7% disappointed and 42.4% simply fell in line with guidance and/or expectations. The numbers look decisively better when we zoom in on respectively the ASX50 and ASX200.
Of the 44 companies of the ASX50 that reported in August only 20% (9 companies) were marked down as a “miss” with 29.5% (13 companies) surprising on the upside. For the 161 companies of the ASX200 the numbers don’t look fundamentally different: 23.6% disappointed (38 companies) against 32.5% (52 companies) that delivered a better-than-expected performance without also issuing negative guidance for the year ahead.
