RAC - Charts & Price Action, page-86

(I wrote and shared the following in the middle of the virus crisis. It still applies to me now ... the only difference to my portfolio is less cash and more RAC!)

In times like this, from an investing perspective, it is first about capital preservation and survival. For those who have that well and truly covered and have dry powder to deploy, then it is a good time to nibble on high quality names (not the general market). Think about what companies you liked (but was too expensive) before the virus outbreak and now think about the likely future prospects given the current virus/economic situation.

I won’t and can’t tell you what to do, but I am happy to share what I have done/been doing. A couple months ago as the virus crisis was taking hold I decided to raise cash and sell all my direct holdings (mainly US tech and Australian shares) except for the two Aussie biotechs (IMU and RAC) I shared with you before. Basically I am now taking a “barbell” approach across the risk spectrum of my portfolio. Cash (no risk) on one end and Aussie Biotech, IMU & RAC, (speculative/high risk) on the other end of the barbell. I hope it doesn’t prove to be a dumbbell approach on my part.

In hindsight, IMU and RAC completed very timely capital raises prior to the virus outbreak. This gives the companies plenty of run way to focus on their objectives without needing to worry about the capital market gyrations. I pity the other companies (both small and large) that needed to raise funds in this market. You probably read about many of these companies in the media, most recently Qantas completing a billion dollar raise at a low ball share price. IMU and RAC dodged a bullet there! Their capital raises were at relatively strong stock prices pre-virus.

Medium to long term - (stating the obvious) IMU and RAC share prices hinges on the results and progress on their cancer technology pipeline.

IMU and RAC can focus on their clinical plans (and potential partnership/s) and not be distracted by fund raising. That is a great place to be!


(Since I shared the above, we all know that RAC did a share placement and released some very positive updates. This share placement did not invalidate what I wrote as it was not urgently needed and was a surprise approach by prominent investors and done at a price above any before the virus crisis. RAC management had the luxury of taking the placement or not, unlike many ASX listed companies that needed to fund raise at all costs. RAC accepted the placement because it was a net positive for RAC and this has borne out in the share price).