Where do small-cap investors look when the markets are down?
Go back a few weeks or months and you’ll see that the COVID 19 coronavirus was being brushed off by Wall Street. Fast forward to last week, and it seems like the other shoe has finally dropped, sending markets falling and many companies alongside them.
With the current level of uncertainty regarding the global risk of the virus, for investors, a variety of factors are currently at play. The immediate concern is which companies are being impacted, and which will be in the future. But soon, gears start to turn as investors shift focus to companies that are going to recover quickly, or find small-caps that are riding against the tide.
With the lingering question of the virus’ scale and timeline up in the air, this week, the weekly Buzz on the Bullboards snapshot shines a light on three companies that paint three different pictures of how Stockhouse investors are being affected.
One sector that was still performing well over the last week was healthcare, and recently the healthcare Bullboards have become fixated once again on
Antibe Therapeutics Inc. (
TSX-V:ATE,
Forum). The biotech company is working on new forms of pain medications that are safer and non-addictive, and a glance at the ATE price chart shows that things are going well. Shares headed into February at $0.475 and are ending the month at $0.65.
The driving factors for Antibe’s climb, at least from the outside, seem to be a few positive corporate developments. Things kicked off on Jan. 13 when the company announced a
new executive hire to aid in finding a partnership for its lead drug, but ATE was quiet for a month following the hire even as its shares increased. Finally on Feb. 24, it announced the publication of a
multi-national study showing positive results from its second drug, and followed that news up on Feb. 25 with a
positive corporate update and interim Q3 results.
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Considering that ATE shares were sitting below $0.45 the last time we
visited the company’s Bullboard, it’s no surprise that the mood over the last week has been upbeat. There are still many things left up in the air, including final results from trials and an upcoming meeting with the FDA, and many investors took notice of increased cash burn as Antibe has ramped up operations. As Stockhouse Member
MUGMODs said, the company is definitely on track so far and following through, it just needs to stick the landing.
“We're not late unless we are told we are going to be late. Everything up until then is just a guess.
Setting up the FDA meeting shows good confidence. Some are talking about cash burn and the need for more money - relax - we knew we were going to spend more in the last quarter, to upsize the trial, etc. Can’t assume last quarter is the go-forward burn rate. Again, we will need company input to better understand this rate…”
(Post: And this is why we wait for the company ...)
Positivity for a cannabis major? That was the
initial case last week for
Canopy Growth Corp. (
TSX:WEED,
Forum) as the LP has been quietly outperforming the other Canadian majors. WEED was up from $25.88 on Feb. 13 to $29.98 the next day and hovered around the price point for most of the next week. Things were looking up, but a broad market selloff quickly brought shares back down to $26.04 by Feb. 25.
What happened to WEED? The initial burst was courtesy of a Feb. 14 release of
positive Q3 fiscal results, which the company has desperately needed. Showing positive growth in revenue and reduced expenses couldn’t have come at a better time, as Canopy struggled in the last few quarters alongside the rest of the market. But negative pressure from the rest of the sector, and especially the scare of COVID 19 driving investors away from risk, was too much for WEED shares to avoid.
The consensus on the WEED Bullboard was that the long-term for Canopy is on the up. The company is performing better and adjusting to the market, rumors of a buyout from US based
Acreage Holdings Inc. are rising, and the move towards cannabis legalization in the US is growing by the day. Still, the impact of the coronavirus, as Stockhouse Member
Arrrrgthisbites pointed out, will likely dampen the mood for quite some time.
“…Yes this is a virus driven event and as such we are only in the beginning phases of this pandemic. While our supply chain is localized to NA it is still highly at risk. I personally view this risk as way higher than any bad quarter report.
My opinion is that unless there is a direct relation to anything in Pot having a proven ability to deter the virus then we are in the same boat as all other companies…”
(Post: RE:BUYING MORe)
Every sector has been feeling the weight of the growing COVID 19 coronavirus epidemic, but none more so than airlines. After all, the final impact on many sectors will be hard to measure for a long time, but companies like
Air Canada Inc. (
TSX:AC,
Forum) are facing the brunt of the short-term impact (and so are their shares). The Canadian airliner is not usually featured on the industrials Bullboards most-viewed chart, but as AC shares have dropped, it has become a hotbed for discussion.
Initially, the stock held out, and Air Canada reported
strong 2019 fiscal results in February just a few weeks after it
confirmed suspending flights to Beijing and Shanghai in January. But the spread of news that infections were growing in Italy, Iran, South Korea, and the US brought a wave of fear, flight cancellations, and lower shares. AC closed at $45.31 on Feb. 19 before beginning to descend, currently sitting at $35.76 at the time of writing.
On one hand, investors on the AC Bullboard see a stock that was performing decently being brought down on global issues, pointing to an inevitable recovery. On the other, however, is uncertainty over how the situation will unfold. Is the panic subsiding and has AC hit bottom, or will the issue continue to press down for weeks or months and bring about a new normal? According to some comparisons from Stockhouse Member
OnTheBalance, however, Air Canada is faring pretty well as far as airlines go.
“…Clearly, AC shares are less liquid than most of the other airlines. In other words, AC shares are the most challenging for the hedge funds to accumulate right now. I will let you draw your own conclusions. STICKINESS is an excellent sign for a stock, especially when there are unusual forces at play. Sticky stocks bounce back like fresh tennis balls. Mind you, AC's buy back team needs a bit of time to make hay. For traders, and timers, can't really provide much input, but for serious shareholders, at this moment, let's watch to see how AC acts on the balance of the NCIB, as that alone now is worth $200 million in Cash savings.”
(Post: LIQUIDITY, and STICKINESS, and why it matters)
Another sector hit hard by COVID 19 is energy, and over the last month, we’ve been tapping into the energy investors to figure out where they believe energy stocks are headed. Initial results matched the positivity being echoed at conferences and on the Bullboards, but as events in February weighed on the sector, the final results were more muted.
While the energy sector has been struggling, investment buzz around metals & mining has continued to build. Mining conferences that were quieter just a year ago are now bursting with activity, and this weekend the Stockhouse team is headed to Toronto for one of the world’s largest mining events, next week’s Prospectors and Developers Convention. That’s why our latest Investor Pulse Poll asks what mining commodities investors are interested in buying. Make sure to head to the
Stockhouse homepage or click the image below to cast your vote!
(Click image to go to the poll)
You never know what a week will bring for the markets, but next week’s promises one thing: clarity. On the table is a better understanding of COVID 19’s impacts, as well as a clearer outlook into political developments in Canada and the US. On top of that, we can expect small-cap investors to react and explore what the market has to offer, and the Stockhouse Bullboards to illuminate their findings. For previous editions of Buzz on the Bullboards:
click here.