The surprise news of the week came from Solo Oil which announced it was investing in helium exploration by buying a 10% interest in Helium One Limited with an option to buy a further 10%. This news trashed the share price even further and wasn’t greeted with enthusiasm by the market. This acquisition could add to Solo Oil’s hidden value. The hidden value is in the gas field that Ntorya2 was supposed to validate. Now we have bought into more potential value but that is all Solo Oil is, potential without the realisation of value. The gas sales from the Ruvuma well was realisation of value and fuelled optimism about Ntorya2 leading to a soaring share price which then crashed when shareholders were disappointed with results.
Hidden value
Other companies in my portfolio have hidden value too, such as the small pharmaceuticals, Verona Pharma and Immupharma. That hidden value is in the value of the research that they have already done and the potential too. How will the value be realised for shareholders? Maybe they will sell the licences for the drugs they are developing. They could be taken over by a larger competitor or they could develop and market the drugs themselves. The uncertainty creates perceptions of risk.
Premier Foods
I think there is still hidden value in Premier Foods. The share price languishes at a level that I bought at a few years ago. The price has been as high as 183 when there was some optimism that the company could recover. There have been brave attempts at marketing using social media but it isn’t an area where you can be amateurish. There is still potential and so there is still hidden value. If they get a grip and redesign packaging and start marketing the products properly the share price could soar. They need investor confidence in case they need more investment in the future.
Tesco
Tesco has had lots of problems and it does have hidden value too and their proposed merger could add to that but again how will that value be realised?
AIM
The AIM is a sub-market on the London stock exchange that has a lot of hidden value. Investors do research and try to identify hidden value and estimate when the value might be realised as an appreciation in the share price. That appreciation is often sudden as the perception of value changes, often as a result of an RNS.
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