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I continue to regard AIM listed Pursuit Dynamics (LSE:PDX) as a total joke of a company and the fact that it has raised another £6 million at 3p to keep the show on the road does not alter the fact. This enterprise has consistently had its “world changing” technology out for trial after trial after trial and no-one seems that keen on handing over hard wonga to utilise it. That investors have stumped up £6 million reminds me of the description once applied to someone engaging on a second marriage: the triumph of hope over experience. With the share price now at 3p where does this leave Pursuit?
I explained pretty clearly in late October why the shares were a sell at 4.55p so those who followed my advice then are in the money.
You can read that piece here
Based on historic cashburn and the cost of raising £6 million my estimate is that net cash ( netting off trade payables) is now £7.2 million. Cashburn has historically been c£450,000 a month but Pursuit has announced that it has cut its property costs so shall we call that £400,000.
Of course that could all change if Pursuit ever secured any meaningful revenues. I cannot see why years of failure on that front should change at any stage soon. If there are now material new revenues then in a year’s time net cash ( minus trade payables) will be down to £2.5 million and once again the hat will be getting ready for yet another fund raise. But I suppose one day Pursuit might deliver. One day.
At 3p the market cap is £8.2 million. That is not a huge premium to net cash. It tells you that the market does not really value the technology at much which – given its track record of commercialisation – is fair. I would expect that as the cash slowly slips away so too will the share price unless Pursuit strikes a deal. Thus this is no longer a slam dunk short.
If you were short I’d close. I would not under any circumstances recommend a purchase of this stock. For now it is one to watch from the sidelines
Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s writings follow him on twitter at @tomwinnifrith
