I agree with your comments Joe , and like you I am a little frustrated the market does not appreciate what it is PGC is building, and I agree until PGC gets over $50m market cap ( 80c per share) the funds are limited in buying as the stock is to tightly held for them to get a serious position now .
It is a chicken and egg , mid sized fund managers cant invest in market caps below $100m because their holding is to significant and to influential , they cant buy in on market and if they want to sell they cant get out.
The only managers that will buy a stock like PGC with a $25m market cap are funds with $5m to $20 m in them , or ones that intend to hold until a corporate event such as a takeover occurs.
PGC best hope for sizeable buy orders is family office money or single broker portfolios where a broker has a diverse client base and manages 10-25 m , the problem with these brokers is they need traders to earn income so the holding is not sticky so prices fluctuate
At the moment the PGC market cap at 40 cents per share is about $25 million
If a fund has around $100 million in it , they normally look each holding to be at least 2.5% minimum , so a holding of that level in PGC would be $2.5 m or 6 million shares ,10 % of the company, the only way they could get set is through a cap raise.
We saw in the placement at 37 cents that 2 or 3 funds bid for the whole placement so do have interest but because they tried to keep everyone happy CCZ gave all of them a shared amount i.e. $100,000 or $250,000 maximum which was stupid because it didn't give any of them enough shares to make the holding significant enough to improve their funds performance, so they sold out ,lost money got left with a bad taste in their mouths and the stock dropped leaving many of us longer term normal shareholders also unhappy for a while .
I must admit I wasn't that unhappy as I got a chance to buy some cheapies
This fund raise though was really poorly managed by CCZ , they should of given the 2 or 3 funds nothing or chosen one as a core holder for the whole placement , and I think if they did we would be 50 plus now .
I know that Paradise returned capital to fund owners because when he got south of $1 billion he simply lost the ability to buy small stocks , imagine a $1 billion fund thinking of buying a stake in a $25m market cap , if say they bought just 1% of this portfolio in PGC that would be almost 50% of the shares on issue, 1% is to small to make it worth their while and 50% is ridiculous .
All that said small companies do move to bigger companies over time , and if you look at Ramsay health care 5 years ago it had very few fund managers , now the share register is full of them .
I think Mark needs to just keep doing what he is doing get 10-15 organic growth , make acquisitions at 3-4 times earnings , don't buy anything to big with shares but use the bank debt and cash flow and we will be fine
I know there is zero chance of any cap raise below 40 cents no matter what the terms or the deal dynamic , in my view the next acquisition will be the same as the current one debt funded and share issue to the vendor
PGC Price at posting:
35.0¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)