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If you want to hit it big (or fail spectacularly), speculate in resource stocks and biotechs

One has to kiss a lot of frogs before one finds oneself puckering up to a prince

Petrel Resources PLC -

Doing end of year reviews and surveying the list of wiped-out share prices, one wonders why any sane investor would back a minerals exploration company.

Then one comes across Petrel Resources PLC (LON:PET), up 1,750% in 2019, and it all starts to make sense.

Of course, one has to kiss a lot of frogs before one finds oneself puckering up to a prince in the resources sector, and that also applies to those investing in the equally binary biotech sector.

Bearing that in mind it is encouraging for those investors with a penchant for speculating on hitting it big that the seven of the 10 biggest share price rises this year came from the three sectors in which the “all or nothing” investors like to fish: oil & gas producers; mining; pharmaceuticals & biotechnology.

The other three stocks were all from the financial services sector.

Petrel’s meteoric rise started in late November when the Tamraz group’s move to take a 51% stake in the Irish company was approved at an extraordinary general meeting.

"Petrel's modest size has long constrained our growth in a Middle East & North Africa (MENA) region bursting with opportunity,” said Petrel director David Horgan in September when Michel Fayad and Roger Tamraz started building their stake in the company.

It was definitely the year for Irish energy plays as Clontarf Energy PLC (LON:CLON) soared 367%.

Most of this share price appreciation took place round about the same time Petrel was soaring.

The aforementioned David Horgan is on the board of both companies; could these two facts (the timing of the share price surges and the composition of the boards) be related?

Clontarf, which has energy interests in Ghana, is actually classified by FTSE as a mining company by virtue of its lithium assets in Bolivia; despite its 367% increase, Clontarf was not the best performer in the mining sector as it had to give way to Eurasia Mining PLC (LON:EUA), which was up 519%.

Eurasia, an established producer of palladium, platinum, iridium, rhodium and gold, saw its share price take off after investment banks VTB Capital and CITIC Group signed-up to assist with “strategic options” for Eurasia’s Kola and Urals mining assets.

Among the biotechs, Silence Therapeutics PLC (LON:SLN) takes the honours, with a 688% increase.

The shares started motoring in July after the company agreed a partnership with US biopharmaceutical firm Mallinckrodt PLC (NYSE: MNK) to develop and commercialise gene silencing treatments for serious diseases.

It ain't over until it's over

Unfortunately, while some biotechs hit it big in 2019, the sector also had the biggest faller of the year but before we move on to that let’s briefly examine a share price story that gives hope for shareholders who took a punt on a tiddler and, in horse racing parlance, “did their money”.

In 2018, Faron Pharmaceuticals Oy (LON:FARN) saw its shares plunge from 830p to 152p in the blink of an eye after its lead drug, Traumakine, did not meet its goals for efficacy following the initial read-out from its phase III INTEREST study.

This year, the shares have risen Lazarus-like by 405%, helped by US regulators giving the company the green light to expand a phase I/II clinical trial of its cancer immunotherapy to the US following the Food & Drug Administration’s approval of Clevegen as an investigational new drug.

The Faron story shows the benefit of having more than one string to one’s bow.

Maybe it also reinforces the old adage, it ain’t over until it’s over and maybe there is a way back for the 10 worst performers of 2019, all of which have lost more than nine-tenths of their value.

Hardest hit of all has been Motif Bio PLC (LON:MTFB), which bombed after the US Food & Drug Administration said in February it wouldn’t be giving the regulatory green light to the company’s antibiotic, iclaprim.

Interesting – in a grisly sort of way – though the list of 10 worst performers is, it is perhaps more interesting to focus on two stocks that narrowly avoided making the list: Metro Bank PLC (LON:MTRO) and Sirius Minerals PLC (LON:SXX).

With market capitalisations of £354mln and £251mln respectively, they are salutary reminders that it is not just stock market tiddlers that can end up taking a big fall.

Top 10 performers of 2019

Rank

Ticker

Name

% change since 2/1/19

1

LON:PET

Petrel Resources PLC

+1,750

2

LON:LEAF

Leaf Energy PLC

+778

3

LON:SLN

Silence Therapeutics PLC

+662

4

LON:EUA

Eurasia Mining PLC

+524

5

LON:STX

Shield Therapeutics PLC

+493

6

LON:FARN

Faron Pharmaceuticals OY

+405

7

LON:CLON

Clontarf Energy PLC

+378

8

LON:YOLO

Yolo Leisure and Technology PLC

+300

9

LON:REAT

React Group PLC

+264

10

LON:ACP

Armadale Capital PLC

+261

 

Worst 10 performers of 2019

 

Rank

Ticker

Name

% change since 2/1/19

1

LON:MFTB

Motif Bio PLC

-99

2

LON:CAB

Cabot Energy plc

-98

3

LON:WCH

Wilmcote Holdings PLC

-97

4

LON:VERS

Verseon Corp

-97

5

LON:AAOG

Anglo African Oil & Gas PLC

-95

6

LON:XSG

Xeros Technology Group PLC

-94

7

LON:NUOG

Nu-Oil and Gas PLC

-94

8

LON:STAF

Staffline Group PLC

-93

9

LON:ANGS

Angus Energy PLC

-92

10

LON:7DIG

7Digital Group PLC

-91

 

Quick facts: Petrel Resources PLC

Price: 4.625 GBX

AIM:PET
Market: AIM
Market Cap: £9.87 m
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