We get asked a lot by companies and fund managers on our views on the market, usually in informal discussions. What we've been telling them and what our own data seems to support, is that there has been a general shift in sentiment to the upside in the course of January. This has been reflected in the closing of two short positions in our active trading portfolio as markets have rallied and even Tesla has benefited to a degree in January trading.
But fundamentally we still have a bearish view on Tesla. While the stock has rallied off USD 108 in January (it ended January at USD 178) we are cautious about taking a long position in the company. There are still too many issues to unpick there for investors.
Warpaint London [LON:W7L]
I spent a long evening at a club in Mayfair kicking the tyres on Warpaint with a specialist small caps fund manager. Warpaint is a trend-driven maker of specialist cosmetics with a very light asset structure and low cap-ex. It is an agile retail play that caters to the short attention spans of the under 25 demographic. We like the way it has been developing its reach since the end of the pandemic. It also sports a very affordable product range which we felt would continue to sell in a recession. The US distribution deals should help it ride the wave of the US recovery.
Gaming Realms [LON:GMR]
We like the i-gaming and casino-related sector as it has historically done well even during periods of recession. At the time we bought Gaming Realms we were still shopping to stocks that could offer upside even if the world was forced to soldier through tough economic circumstances in 2023. Gaming Realm invents gambling games you can play on mobile devices. It taps into the massive global online boom in digital gaming. Gaming Realms is also working with some very large brands in the space, including the likes of Flutter Entertainment and Sky Betting & Gaming Vegas. We made over 13% on this one before the end of January.
Yellow Cake [LON:YCA]
Yellow Cake has been in our small cap portfolio for a long time now. We like it because it offers pure play uranium exposure to investors who want to take advantage of any spikes in the price. A big slice of the European and US energy market is still heavily reliant on nuclear. And as some energy analysts are fond of saying, there is no road to net zero emissions that does not go through nuclear. Permanent solution or temporary, nuclear still looks like it has a critical role to play in meeting global energy needs. Yellow Cake owns actual uranium and has recently exercised an option to take a massive delivery from Kazatomprom.
FPX Nickel [TSXV:FPX]
We published an update on Canadian nickel explorer FPX Nickel in January. We have met with the management team here in London while they were visiting the UK. We like the prospect it offers investors of a potentially game-changing nickel deposit which could be easily accessed by entities in the US that are going to get very nickel-hungry in the next decade. Canada has been designated a US-friendly country in the recent Inflation Reduction Act, which plays into the hands of miners of Canadian battery metals. FPX is fully-funded for the next two years and just sold a 9.9% stake to an undisclosed strategic investor.
CleanTech Lithium [LON:CTL]
CleanTech Lithium is another battery metals play which we managed to get into relatively early. At the end of January we were up nearly 50% on the trade, but feel it has more to come. This is a London-listed lithium miner which was already developing a couple of brine sites in the desert region of Chile. The management team has been very focused to the extraction of high purity lithium which also meets the sustainability requirements of European battery makers. The company is now listing on the US OTCQB, so US investors should also be able to get a piece of the action.
Sold this month: Kingfisher Short, Tesla Short, MTI Wireless, TAAT Global Alternatives
So how are our picks getting on?
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