Interesting take from a few fundies
https://www.livewiremarkets.com/wires/buy-hold-sell-the-5-most-tipped-small-caps/
Polynovo (ASXNV)Bella Kidman: Jun Bei, I'll start with you. Polynovo - they develop and manufacture technology for skin graphs. Buy Hold or sell?Jun Bei Liu (Sell): It's a sell for me because I'd much rather be in a different business, it’s very similar, it's called Aroa, and it is a very similar business, but trading at a fraction of the multiple. Now, Polynovo is a great market leader, it's innovated the market, it's expanded the market, but more recently it has disappointed the market in terms of the impact from COVID-related shut down in the hospital system and the like, and potentially it will come through. But it is trading on a very, very expensive multiple. And on that basis, I just think you'll get much better return coming out of buying Aroa, which is a very similar business coming out of New Zealand and just reported today, great numbers. Of course at the same time, they're all being impacted by the same COVID impact. So it’s very leveraged to the second half and the earnings coming through quite quickly. It’s innovated its business and actually has a very, very good clinical study to support the efficacy of its product, Aroa itself. So yes, on this basis, I think much rather to be in the up and coming market leader than the incumbent one that's trading on much higher multiple.Bella Kidman: James, Polynovo was up 107% in 2020. It hasn't really kicked the year off the same way. Buy, hold, or sell?James Gerrish (Sell): Yes, I've got a sell on it. Really expensive stock that has missed in terms of their outlook. I think that's a really key thing for investors to monitor. If something is priced for perfection and it doesn't deliver it, I think it'll be under a fair amount of pressure going forward. They're super high beta stocks. We don't trade a lot in the biotech space, simply because they're really high beta we’re a high conviction portfolio. So it's really hard to put a really decent market weight into, or a decent portfolio weight I should say, into a stock that's so uncertain and non-predictable in the short term and has such big swings in share price.
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