📈 2 stocks I'm watching

Deregulation it is!

Rachel Reeves has decided that cutting the red tape is the way to boost growth.

I agree.

When UK businesses are deciding to relocate to other exchanges or not even bother with the UK in the first place, this is not for no reason.

Starling Bank is the latest to snub the UK and explore a listing in the US.

Wise is looking to exit the UK as its primary listing.

Revolut (a British success story) has decided that listing in the UK is “not rational”.

It has cited lower trading fees and more liquidity in the US for this.

So ultimately, the London Stock Exchange and the UK govt can either whinge about this or do something about it.

It’s big talk for now. Let’s see if the walk follows.

A big step would be to get rid of Stamp Duty.

We want buyers for UK stocks - why are we charging them 0.5% on Main Market shares?

More transactions leads to more liquidity. More liquidity leads to more capital.

More capital leads to better functioning capital markets.

That means more IPOs.

It means more secondary issues (placings).

It means more businesses wanting to list in the UK and bolsters the City.

Jobs for brokers, research, funds, data providers, other services...

And let’s be honest - this is not going to be an overnight fix.

It’s a start. And could be the turning point. But time will tell.

And before we continue, a quick thank you to our sponsor XTB that offers a Stocks & Shares ISA with 0% commission on ETFs and stocks, and pays out 4.5% interest on uninvested cash, which is better than the Bank of England. You can open a free account here.

Audioboom (BOOM)

As always, everything I write and say is my own personal opinion only. It is NOT financial advice.

I don’t accept money from listed companies to talk about them unlike other market commentators, so whilst this is independent nothing is a stock recommendation to buy or sell.

These are ideas only, and whilst I try to be balanced, sometimes I will be wrong.

Therefore, it’s important that you do your own research!

I have re-entered Audioboom at around 300-310p.

This would’ve been at 270p in the placing, but unfortunately I missed the Market Sounding from one of my brokers due to the amount of research I get sent.

And the other broker I did get wall crossed on didn’t put the order in the same day, only for it to be closed the next morning.

I was told that the ABB was a ‘formality’ as the money had already been raised.. which begs the question: what’s the point?

This is disappointing, because dilution was minimal, and it’s an attractive acquisition.

Paying up to £10 million for a company that is far smaller than Audioboom at £54 million doesn’t seem like a bargain straight away, but management believe this is excellent value compared to other podcast industry transactions.

One of the complaints of Audioboom from private investors has been that its balance sheet is not strong, therefore I think management could’ve taken opportunity of some of the oversubscription and added an extra £1 million to the balance sheet.

However, they clearly feel like they don’t need it, and in fairness I can’t remember when the last placing to raise money was, so they will know their capital cycle well enough.

It doesn’t mean that management hasn’t made any boo-boos though.

Signing large minimum revenue guarantees as the podcasting market went through a downturn meant that Audioboom lost money.

But on the surface, this looks to be a good move in what I believe is going to be a consolidate or be consolidated industry.

Be aware that the placees are in at 270p and so 300p and 330p are 10% and 20% up.

Not a bad profit for a few days, so it’s not unlikely we’ll see some trimming.

And if the stock goes below 260p - I’ll be ejecting.

BOOM historically has had wild swings in its share price.

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This next stock could be positioned right if we see a big rebound in UK capital markets.

There are some downsides here but it’s geared the right way for any resurgence.

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