Naively, I wrote about the tying up of many loose ends from 2020 in last month’s round up. Perhaps the prospect of a much improved 2021 clouded my vision somewhat.
January started with a bang. Trump rallying protestors to take to Capitol Hill set the tone for a month of further conflict and upheaval.
We saw Covid 19 vaccine shortages prompt moves from the EU to shake things up with an early test of the Brexit deal. The decision to trigger an emergency provision in the agreement to control Covid vaccine exports from the EU stemmed from the bloc’s concern over vaccine supply and threatened to dampen investor enthusiasm. However, a fairly swift backtrack ensured calm and order were restored.
The same can’t be said for the conflict between private investors and hedge fund shorting practices. We wrote about the Reddit Army and Gamestop at the end of January which served to destabilise confidence in the financial markets. It remains to be seen how this battle will ultimately pan out but the Armchair Trader team feel this one is likely to rumble on for a while yet.
The Armchair Trader’s December picks
Having listed on the Toronto Stock Exchange in January, HempFusion [TSX:CBD.U / OTC: CBDHF] popped up on our radar back in November, and looked immediately like what we’d describe as a ‘second wave’ cannabis play. HempFusion is a rare cannabis sector company with no debt. It also has regulatory approvals signed off in the US and a very impressive distribution network in place. It already has FDA-listed OTC medical products for sale in US pharmacies. The cannabis sector is booming in 2021 with the prospect of support from the Biden administration leading to further relaxation of US regulations and HempFusion is well placed to benefit.
Colorado-based developer of the trademarked Precision Mapping Solutions, ProStar Holdings Inc. (TSXV: MAPS) was added to our picks on 11th January when it listed on Canada’s TSX Venture Exchange. The company is coming onto the market at a very interesting time in the US, as we anticipate further post-COVID construction spending at both federal and municipal levels as part of a trillion dollar infrastructure spend. The SaaS technology company has a highly scalable business model with each new project becoming its own ongoing revenue stream. It helps clients save money, protect the environment and public safety, all while streamlining corporate and governmental operations.
Compass Group [LON:CPG], the global catering business, sailed into something of a short term publicity storm in January over its provision of free school meals to UK schools. We expect Compass Group to get past the school meals scandal, but changes in working practices further down the road are also going to hurt the company considerably. Short term momentum is expected on the short side, but there could be longer term opportunities for short sellers as the changes to working practices and extended lockdowns of schools and educational facilities make themselves felt in Compass Group revenues.
Shares in US med tech small cap stock Senseonics Holdings (NYSE:SENS) soared in January on the announcement that EmblemHealth is now providing coverage for its Eversense CGM System and the raising of $50m through a share placing. The stock did run out of puff towards the end of the month as we predicted but with the company’s next earnings date on 13 May, there looks to be big institutional demand, a sound business case, and a lack of stock to meet demand, so we anticipate further upside on this one.
Our final pick of the month was semiconductor materials play IQE [LON:IQE]. Shares have been rising since March last year but are attracting more interest now as global demand picks up. The semiconductor market is looking hotter than ever as we move into 2021 and IQE looks like it should justify the enthusiasm for its shares. The stock does look like it has plenty of momentum and is being lifted by some significant macro trends across the entire semiconductor market.
By way of an update on our picks this month, we caught up with Brigadier Gold Chief Geologist Michelle Robinson on our latest podcast , while Taat Lifestyle & Wellness sales of its Beyond Tobacco got off to a great start, Christina Lake Cannabis began production of its cannabis-derived crude oil and Nano One is in discussions with the Chilean Clean Technology Institute about a joint project with Associated Universities Inc.
Here’s how our picks are performing
|Company/Instrument||Start price||Current price*||Percentage change|
|Taat Lifestyle & Wellness||1.26||2.03||+61%|
|JPMorgan China Growth & Income||624||738||+18.3%|
|Christina Lake Cannabis||0.83||0.92||+10.8%|
|Compass Group [Short]||1405||1310||+6.8%|
*Prices as of close of play on 29th January 2021
Removed from The Armchair Trader’s current watchlist for next month: Copper position triggering exit rule “ +25% profit within 6 months” Closed with gain of +27.3%. Bushveld Minerals position triggering exit rule -10% stop loss. Closed with gain of +45.8%. Orsted triggering exit rule -10% stop loss. Closed with gain of +19%. Bitcoin triggering exit rule “50% profit within 3 months”. Closed with gain of 66%.
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