Buy shares on market – Share Purchase Plan (SPP) cancelled

Brad Holland

Brad has over 20 years experience in the Australian and US equities and options markets. Brad specialises in equities and options for capital growth, income generation and capital protection. He also specialises in finding opportunities in small to medium cap stocks. Brad holds RG146 - Securities & Managed Investments and Accredited Derivatives Adviser Level 2 qualifications.

November 5, 2021

AHQ.AX | High Conviction Report

Once again, we find that with many small companies, individual shareholders miss out on the opportunities sophisticated can access.

In the last update, the company announced a placement to sophisticated investors via a two-tranche placement at $0.50 to raise $25 Million. Individual investors could purchase shares through an SPP at the same price as sophisticated investors. The SPP was to be capped at $5 Million.

It was our intention to buy additional shares in the SPP, as this is no longer, we will look to buy shares on market.

The company decided to increase the placement to sophisticated investors to $30 Million and scrape the SPP.

Why are we buying additional shares now?

  1. AHQ is on the cusp of rapid expansion
  2. Prices for coking coal remain elevated
  3. Cash flow in the most recent quarter was only $1.7 million bit this increases substantially in the coming quarters
  4. Based on projected FY2022 EBITDA Allegiance is trading on a multiple of 2x
  5. Strong management with a good history of delivering
https://stockhead.com.au/resources/allegiance-coal-on-the-cusp-with-cargo-ready-to-sail-from-us-mines

In the short-term upside might be limited as the market digest the recent placement but the future looks very promising.

Trade Action

Volume can be on the low side in this stock on any given day so do not feel the need to chase the share price.

Buy 7,500 shares up to $0.51.

We are still going to hold off on placing a stop loss on the position for the time being.

The successful purchase of the additional shares will reduce to average price to $0.618.

This is general advice only. MF & Co Asset Management has not considered your personal financial needs, objectives or current situation. This information is not an offer, solicitation, or a recommendation for any financial product unless expressly stated. You should seek professional investment advice before making any investment decision.

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