Brian Henry says Arria might have lost Shell, but it has gained 10 new customers. Photo / File
Brian Henry says Arria might have lost Shell, but it has gained 10 new customers. Photo / File
Opinion by
Arria backer shrugs off 70% share-price fall.
Brian Henry remains surprisingly upbeat about Arria NLG, even suggesting that a more than 70 per cent drop in the British technology firm's share price last week gave canny traders a buying opportunity.
The Kiwi founder of Diligent Board Member Services played a key role in establishing the London-listed company, whose artificial intelligence software, developed atthe University of Aberdeen in Scotland, sifts through data to generate reports.
Arria, which had been tipped as an NZX contender, raised about US$20 million from high profile New Zealand investors including Theresa Gattung and Gareth Morgan before its December 2013 initial public offering and listing on London's AIM market.
Last week's share price plunge was sparked by the announcement that fundraising talks had stalled after Arria's loss of its biggest customer, oil giant Shell.
New York-based Henry, who remains an Arria shareholder but has no operational involvement with the company, said the big drop was a surprise.
He blamed the plunge in oil prices, which was forcing firms such as Shell to slash their budgets, for the contract termination.
Arria had recently secured about 10 new clients, so revenue would continue to come in from other sources.
"Arria will obviously be more concerned about its funding situation and will need to see its capital plans through to completion," he said.
"I'm sure we will hear more from Arria's board on this as they digest this news, and typically - when one door closes another opens."
Henry, who was pinged by the Financial Markets Authority last year for manipulative trading in Diligent's NZX-listed stock, noted that more than 3.5 million Arria shares had changed hands after last week's announcement.
"Someone is being pretty smart, risk taking, enterprising ... and purchased those bargain-basement shares," he said.
"I am not suggesting you or anyone else should do that, as I can't advise you or anyone on anything, but you should look to Arria or its brokers for more information."
You've got to give him points for unwavering optimism.
Arria shares closed at 8.5p yesterday, 97 per cent below the closing high of 282.5p they reached immediately after the IPO.
Waiting, waiting...
A few weeks have now passed since the FMA said it expected to wrap up its investigation into Milford Asset Management in a few weeks.
"We hope to make a public announcement at that time or shortly thereafter," the regulator said on April 2.
But results of the investigation into alleged market manipulation by an as-yet unnamed Milford employee don't appear to be imminent.
"I don't want to put a time on it, but we are working towards the close of the investigation," said FMA spokesman Andrew Park on Wednesday.
"It won't be too long."
The investigation is understood to have started around the middle of last year.
Onward and upward
The Vista Group International rally isn't letting up.
During Tuesday trading, the cinema management software provider's shares hit a record of $5.25, a 123 per cent gain on the stock's $2.35 August IPO price.
From left: Vista chairman Kirk Senior, chief executive Murray Holdaway and NZX chief Tim Bennett pictured at the company's sharemarket listing at the NZX offices in 2014. Photo / Jason Oxenham
That followed the announcement that its data analytics subsidiary, Movio, had signed a deal with the second-largest theatre chain in the United States, AMC Theatres.
Since its listing the company - which holds a close to 40 per cent share of the world's large-cinema market - has announced a string of deals, including acquisitions and the introduction of its technology in China.
And while profits might be unfashionable in the growth-obsessed software world, Vista is defying the vogue and is turning them.
In February the company reported a full-year profit of $4 million, 17 per cent above its prospectus forecast of $3.4 million. Revenue of $47.2 million was 4.4 per cent above prospectus expectations.
Vista shares closed unchanged yesterday at $5.20.
Salt takes over
Salt Funds Management has taken up its $690 million active New Zealand equities mandate with AMP Capital.
The Auckland-based fund manager was appointed to the contract in March, but the hand-over didn't take place until last Friday.
A slew of substantial security holder notices was released on Tuesday, confirming the transfer of shares previously managed internally by AMP into Salt's control.
Salt managing director Paul Harrison said the transfer had gone "remarkably smoothly".
"We were pretty well prepared for it," he said. "It's really just been us getting our heads around communicating with the custodian, which is BNP [Paribas], and also AMP."
AMP announced in January it would outsource its local active equities management operations.
That followed a string of staff departures from AMP, including former deputy head of equities John Phipps and portfolio manager Douglas Lau.
Elephant versus bull
"Every five to seven years people forget that stocks crash every five to seven years - make yourself familiar with financial history."
That was how financial services provider The Motley Fool aptly described the complacency of some investors on Twitter last week.
We're now more than six years into a bull market that began in March 2009. For equity investors, things have been so good for so long that it's easy to forget that markets don't keep going up forever.
In its latest economic and investment outlook report, Craigs Investment Partners said an increasing trend among retail investors to move from cash and bonds into growth assets like shares, to obtain higher yields, was an elephant in the room.
We've seen the results of this asset shift in the rallies of stocks including Mighty River Power, Meridian Energy, Auckland Airport and Genesis Energy.
But Craigs said investors needed to be aware of the risks.
"The last material fall in markets was six years ago during the global financial crisis, when sharemarkets fell by 30 per cent to 40 per cent," the brokerage said.
"A similar fall could happen again at any time and the next recovery may not be as rapid as we have seen since markets troughed in 2009."
US Federal Reserve chairwoman Janet Yellen said on Wednesday that high stock valuations posed a danger to financial stability.
"I would highlight that equity market valuations at this point generally are quite high," Yellen said in a panel discussion with International Monetary Fund managing director Christine Lagarde.
"There are potential dangers there."
She might have been stating the obvious, but her comments sparked anxiety on Wall St and US stocks closed down.
