SMALL CAP MOVERS: Diurnal shares jump; Cakebox tumbles

Small-cap stocks were not immune to the sentiment-driven decline in markets this week.

Concerns about inflation, higher interest rates and the general state of the global economy caused the AIM All Share to falter.

It fell 4.2 percent, more or less in line with the performance of the FTSE 100 over the week.

But while the blue-chip index is down less than 5 percent so far this year, underscoring its solidity, the junior market has lost 29 percent of its value.

Why the separation? It can be seen that Footsie is home to the stocks sought in times of turmoil.

The flip side of this equation is that those looking for a safe place to put their money are typically the same people leaving riskier investments at AIM.

With increasing trade sanctions against Russia and a rather bleak outlook for inflation and economic growth, those who have been pumping money into subordinated stocks seem to have little recovery in sight.

Well, if you’re an opportunist, current conditions create bargain opportunities.

In fact, it looks like Neurocrine Biosciences has figured it out.

On Tuesday, the California group submitted a £48m knockout bid for Diurnal, which was trading at a premium of 141 per cent to Friday’s close.

Still, at 27.5pa supply is still well below the 66p the stock changed hands for in January and well (well) below the 2018 peak when Diurnal broke 200p.

While tech stocks around the world have performed poorly as inflated valuations reset, there have been the odd exception to the general rule.

Bango was a case in point. Its shares soared 22 percent this week after it signed a deal to acquire Japanese giant NTT Docomo’s mobile payments platform for a negligible fee.

But make no mistake, this is a transformative deal for the British group.

Broker Liberum estimates that the annualized cost synergies from combining Bango’s business with Docomo Digital will be in the region of £18m by 2023.

Adjusted profit will rise more than 50 per cent to £25.5m in the following year, he added.

To stay on the risers, small-cap gas and oil stocks were a good bid — again.

The now indiscriminate buying across the sector reflects a growing belief that industry regulations are changing to allow more onshore drilling in the UK.

It is currently believed that energy security will be one of the first issues to be addressed by the new Tory government led by Prime Minister-elect Liz Truss.

Angus Energy led the field, up 76 percent after it began making its first gas sales from a field it operates in Lincolnshire.

Onshore drillers Egdon Resources and Union Jack were also chased up, 25 percent and 17 percent respectively.

While Rockhopper Exploration gave back some of last week’s gains, down 15 percent, its cohort working in the waters off the Falkland Islands had a stellar week, with Argos Resources and Borders & Southern both down over 20 percent on no news gained.

Bulletin board chatter suggests a roll-up may need to be done in the South Atlantic.

As for the fallers, Serinus Energy slumped 25 percent on Friday after confirming that its latest well, Romania, was a dud.

While there were gas shows, they weren’t enough to justify testing. Work will now focus on a second well near the existing gas infrastructure.

Petroneft, which operates in Russia’s Tomsk Oblast, saw its shares fall 28 percent this week after announcing it was in a standoff with the company that stores and transports its oil.

Cake Box’s shares plunged 20 percent after triggering the earnings alert, with the egg-free baker blaming inflationary pressures for his struggles.

Finally, the first IPO of the new month took place on Friday.

Zamaz, an ethical consumer goods company, has come to the market through a direct listing supported by stakeholder Atlas Capital Markets.

It has raised just under £4m by issuing new shares and has a £15m loan facility to draw on.

The Zamaz portfolio includes Ecomoist, an ecological screen cleaner made from natural sources, and Bella Dispensa, an innovative online grocery in Italy.