See below by Lucien Miers. It seems he also cannot read a share register and the words “short squeeze”…
When Ceres Power, the fuel cell technology company, was floated on AIM in 2004 , its fate was pretty much sealed by Tony Blair, who described it as a “world leader”.
Eight years, four Nomads, several directors and some £63mn later the company had run out of money and backers and was preparing for a wind down of the business, having failed to generate any meaningful sales.
Then in Late November of last year Ceres announced a radical slimmed down business plan and the raising of £3.3 mn (before expenses) at 1p per share supported chiefly by Ora Capital, the quoted investment vehicle of Welsh financier Richard Griffiths, and a firm named IP Group PLC who took control of some 54 % of the company between them, valuing the company at some £4mn.
Fast forward a month and the shares were trading at 8p valuing Ceres at over £30mn. Now I don’t claim to know a lot about fuel cell technology (from its financial track record it would appear that the company has similar limitations) but for private investors to be happy to pay an eightfold premium to what the insiders have stumped up less than a few weeks before, seems pretty barmy, particularly as Ceres has said it must raise more funds in a year’s time.
Griffiths is clearly, for the most part, a wily stock operator (although he did go blundering into Blacks Leisure shortly before it failed) but is it really a good idea to effectively pay eight times what he has for an investment in such a short time? Would one do it even if he were Warren Buffet? I don’t think so. Predictably the shares have slipped a bit to around 6.5p and will surely settle lower once the excitement subsides.
I have sold them short on this basis.