Hello folks and fellow ADOrites
Where are we today? I know we are all assessing today's announcements, and my conclusion is this ...
WE are collectively in a very good place and market position ... this i firmly believe in .
My reasons are below and as an ex Macq Banker I have reflected on the last few months of announcements and market moves/outcomes and I share my positive mindset below with you all.
1] Small companies like our own ADO offer leadership in innovation that has the potential to transform industries and society and humanity and deliver significant capital appreciation. Investment fundamentals in ADO as a small small cap look more attractive relative to other market segments, supported by structural growth opportunities both domestically and offshore. We have this opportunity now in the palm of our hands as shareholders.
2] capital raisings are undertaken by all classes of asset on the ASX inclusive of mid and large cap stocks and it is really an avenue for small caps to accelerate growth, either organically or through internationalizing its business and attacking the total addressable market-TAM- market share and for small scale acquisitions. i.e. Zip Co (ASX: Z1P) and numerous other small tech/biopaharmas and mining stocks, tap the credit markets through capital raisings to turbo charge growth opportunities. Additionally, the capital raise for ADO, is micro dilutive on a soi [share on issue] basis, and when traded off against the leverage and multiplier effects we will gain from sourcing $12m in cash as a cash asset and net asset booster to turbo charge promotion, marketing and production partnerships as well as offshore upscaling of licensor/ producer status... it is folks a win win scenario for the short-medium and long terms. We have this opportunity now in the palm of our hands as shareholders.
3] Once the capital raise is digested by the market for its purpose and the application of the monies, fundamentally well positioned and strong businesses with a world class asset and tech like ours, invariably, go from strength to strength. If we cast back to the GFC, in many cases those who bought into capital raisings during that period have been rewarded handsomely with long-term gains. Consider Wesfarmers (ASX: WES), which conducted an entitlement offer at $13.50 per share, or Macquarie Group (ASX: MQG), which ran a Share Purchase Plan at $26.60 per share. Even Commonwealth Bank (ASX: CBA) issued shares at $26 each to retail holders through an SPP in 2009. MQG is now $158/CBA $88. Do you see my drift?
4] I do see ADO as emulating and joining other Australian small caps offering investors early-stage exposure to many of these emerging thematics that can deliver super-normal returns. A recent example is the recent strong performance of a cohort of ASX listed technology companies known as the WAAAX stocks (Wisetech, Afterpay, Altium, Appen and Xero). These companies started off as Australian small caps and many have since migrated to being large caps. The WAAAX stocks have delivered stellar returns which are well in excess of the FAANG stocks (the five prominent American technology companies being Facebook, Amazon, Netflix , Alphabet-formerly known as Google . We have this opportunity now in the palm of our hands as shareholders.
5] It is highly unlikely that the share price will drop to the capital raise price, as has been the case for Cochlear (ASX: COH. You see the capital raise is quintessentially micro dilutive and the offseting benefits far exceed and outweigh the dilutive component. Growth always comes at a price and world class companies with developed moats and strategic - in demand IP and assets will always command market demand and respect. Coh raised at $140 and today trades at $220. We have this opportunity now in the palm of our hands as shareholders to hold tight our shareholder positions and command mkt value based on the huge potential that a "total addressable market value" affords our world class biotech IP and product suite.
What is this value you may well ask?
Well we all know that this value is highly incremental from here as we seek to execute and internationalize every division and product line within the ADO business, we have all helped to fund and build from its humble beginnings.
Remember that nothing is organic in infancy and that it is through credit and debt that growth is fueled and that the trick always lies in duplicating successes and processes that have worked.
Keeping the faith more than ever
We have this opportunity now in the palm of our hands as shareholders.
Have a great week all.
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